Taxable Account with Fidelity: FSKAX vs VTSAX?

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CaptainJ
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Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by CaptainJ »

I currently have some investments in an actively managed mutual fund with Fidelity, and I would like to transfer them into a total market index fund. For various personal reasons, I would prefer to keep my account with Fidelity rather than switching over to Vanguard. I also want to have automatic investments set up, so I would rather buy a mutual fund rather than an ETF. Given these, it seems like my 2 best options are probably either FSKAX or VTSAX, right? However, I'm not sure which one would be preferable. Since this is a taxable account, I've read that VTSAX is more tax-efficient than FSKAX. On the other hand, Fidelity charges a per-transaction fee for buying VTSAX, which I plan to do either on a bi-weekly or monthly basis. So given these two caveats, which one would you recommend for better overall returns? Would the added tax efficiency for VTSAX outweigh the additional fees, or would it be better to go with FSKAX for no fees but higher taxes from the capital gains distributions? Thanks!
niceguy7376
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by niceguy7376 »

Welcome to the forum.
What would be your total investment on yearly basis into this taxable account?

My view - go simple and go with FSKAX (Fidelity® Total Market Index Fund).
jco
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by jco »

Unless you have massive amounts of funds your are investing, the transaction fees for buying VTSAX through Fidelity should be substantially more than the potential tax benefits of having VTSAX over FSKAX. Stick with FSKAX.
Last edited by jco on Sun Feb 02, 2020 10:38 am, edited 1 time in total.
anil686
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by anil686 »

Now that you can buy fractional shares of ETFs, one could consider itot or vti at fidelity as well....
Topic Author
CaptainJ
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by CaptainJ »

Thanks all for your helpful replies so far. For added context, I would anticipate investing approximately 20K per year into this account, in addition to the approximately 150K lump sum that I will transfer over from my current mutual fund.
lexor
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by lexor »

CaptainJ wrote: Sat Feb 01, 2020 8:26 pm I currently have some investments in an actively managed mutual fund with Fidelity, and I would like to transfer them into a total market index fund. For various personal reasons, I would prefer to keep my account with Fidelity rather than switching over to Vanguard. I also want to have automatic investments set up, so I would rather buy a mutual fund rather than an ETF. Given these, it seems like my 2 best options are probably either FSKAX or VTSAX, right? However, I'm not sure which one would be preferable. Since this is a taxable account, I've read that VTSAX is more tax-efficient than FSKAX. On the other hand, Fidelity charges a per-transaction fee for buying VTSAX, which I plan to do either on a bi-weekly or monthly basis. So given these two caveats, which one would you recommend for better overall returns? Would the added tax efficiency for VTSAX outweigh the additional fees, or would it be better to go with FSKAX for no fees but higher taxes from the capital gains distributions? Thanks!
I'd use ITOT. FSKAX would be less tax efficient. VTSAX would be a disaster with all the fees you'd get.
“The miracle of compounding returns is overwhelmed by the tyranny of compounding costs.” -Mr. John C. Bogle
howdy007
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by howdy007 »

anil686 wrote: Sat Feb 01, 2020 9:28 pm Now that you can buy fractional shares of ETFs, one could consider itot or vti at fidelity as well....
How to place order for fractional etfs rder at fidelity. thx
mroe800
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by mroe800 »

howdy007 wrote: Sun Feb 02, 2020 3:36 amHow to place order for fractional etfs rder at fidelity. thx
This feature was just announced mere days ago - it is being rolled out to their mobile platform first. As a user of the mobile app, I do not have this feature yet.
howdy007
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by howdy007 »

mroe800 wrote: Sun Feb 02, 2020 3:43 am
howdy007 wrote: Sun Feb 02, 2020 3:36 amHow to place order for fractional etfs rder at fidelity. thx
This feature was just announced mere days ago - it is being rolled out to their mobile platform first. As a user of the mobile app, I do not have this feature yet.
Got it. I do not have it too, just checked but good feature to have
L82GAME
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by L82GAME »

anil686 wrote: Sat Feb 01, 2020 9:28 pm Now that you can buy fractional shares of ETFs, one could consider itot or vti at fidelity as well....
+1 VTI.
"Simplify, simplify, simplify! I say, let your affairs be as two or three, and not a hundred or a thousand…” - Thoreau
Topic Author
CaptainJ
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by CaptainJ »

Thanks for your replies all. What are your thoughts about this idea?: Transfer the lump sum from my current Fidelity mutual fund into VTSAX (for a one-time fee of $75), and then buy FSKAX with my automatic monthly investments in order to avoid recurring fees going forward. This way, I would at least get some of the tax efficiency that VTSAX provides, while only having to pay a one-time fee.

To reiterate, the reason I do not want to buy an ETF like ITOT or VTI is because I want to set up automatic investments, and to my knowledge ETFs do not allow for this. Thanks!
Cash
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Cash »

I recently went through this thought process. FSKAX is very tax inefficient because of the capital gains it throws off, but I did not want to pay the fee for VTSAX. So I finally gave in and opened a Vanguard account for automatic investments in taxable (VTWAX in my case). I will still do everything else at Fidelity. And if they start allowing automatic purchases of fractional ETF shares, I will convert the Vanguard mutual funds to ETFs and transfer them over.
Chip
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Chip »

CaptainJ wrote: Sun Feb 02, 2020 7:14 am Thanks for your replies all. What are your thoughts about this idea?: Transfer the lump sum from my current Fidelity mutual fund into VTSAX (for a one-time fee of $75), and then buy FSKAX with my automatic monthly investments in order to avoid recurring fees going forward. This way, I would at least get some of the tax efficiency that VTSAX provides, while only having to pay a one-time fee.

To reiterate, the reason I do not want to buy an ETF like ITOT or VTI is because I want to set up automatic investments, and to my knowledge ETFs do not allow for this. Thanks!
I would not pay the $75 fee. Not that I recommend it, but if you're going to split investments as you describe, buy the lump sum of ITOT or VTI, then monthly investments in FSKAX.

Do not believe the hype that FSKAX is "tax inefficient". It is very tax efficient, just slightly less efficient than VTSAX. And while I don't have my 1099-DIV yet, the preliminary numbers I'm seeing indicate that for 2019 it will be more tax efficient than VTSAX.

I would suggest before you do anything, run the numbers to see how much this supposed tax inefficiency of a full investment in FSKAX will actually cost you.
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CaptainJ
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by CaptainJ »

Thanks Chip, that's very helpful! Do you know of any resources for how I would run the numbers to determine the tax-efficiency of FSKAX?
Cash
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Cash »

I agree that you should run your own numbers. This should help. The last time I ran my numbers, FSKAX would cost me $180 per $100k more than VTSAX.
UpperNwGuy
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by UpperNwGuy »

Cash wrote: Sun Feb 02, 2020 7:35 am I agree that you should run your own numbers. This should help. The last time I ran my numbers, FSKAX would cost me $180 per $100k more than VTSAX.
I suspect your numbers are now out of date. You should run your numbers again to include 2019.
Topic Author
CaptainJ
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by CaptainJ »

Cash, that difference of $180 per $100K: is that overall, or per tax year?
anil686
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by anil686 »

howdy007 wrote: Sun Feb 02, 2020 4:00 am
mroe800 wrote: Sun Feb 02, 2020 3:43 am
howdy007 wrote: Sun Feb 02, 2020 3:36 amHow to place order for fractional etfs rder at fidelity. thx
This feature was just announced mere days ago - it is being rolled out to their mobile platform first. As a user of the mobile app, I do not have this feature yet.
Got it. I do not have it too, just checked but good feature to have
I did it on Friday via the mobile app. It is not explained well on the site IMO. Basically you would make a purchase like you would normally do under buy and instead of shares, highlight dollars. Put in a dollar amount for the security you would like to purchase and it gives you the shares you will buy (1.3792...) and it is done. Similar to before where you would enter a share number like 20 and it would spit out a dollar amount you would need... Hope that helps...
mortfree
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by mortfree »

Do you go to McDonalds and order a Whopper?

If you want the vanguard fund go with VTI at fidelity or open a vanguard account.

Each requires a little extra effort (manual transaction versus account setup).
Topic Author
CaptainJ
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by CaptainJ »

Cash wrote: Sun Feb 02, 2020 7:35 am I agree that you should run your own numbers. This should help. The last time I ran my numbers, FSKAX would cost me $180 per $100k more than VTSAX.
Are there any instructions on how to use this spreadsheet? I can't seem to find either FSKAX or VTSAX anywhere among the list. Thanks!
Chip
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Chip »

CaptainJ wrote: Sun Feb 02, 2020 7:33 am Thanks Chip, that's very helpful! Do you know of any resources for how I would run the numbers to determine the tax-efficiency of FSKAX?
Here's the link to triceratop's original spreadsheet. It has 2017 numbers in it. You'll need to download it and enter 2018 numbers, new funds, as well as your tax rates. Then come back and enter 2019 numbers in a new copy when they become available.

Other factors to consider:

Actual returns of the funds before tax. They aren't guaranteed to be the same.
Changes in expense ratio over time, which has affected and will affect total return.
Hassle factor of owning one fund vs. two or three.

Please understand that the tax efficiency of any very low cost total market index fund is one of the LAST things you should be worrying about. They are ALL going to be pretty darn good. Your asset allocation, asset location decisions, etc. have much bigger impacts on your portfolio return.
Cash
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Cash »

CaptainJ wrote: Sun Feb 02, 2020 7:52 am
Cash wrote: Sun Feb 02, 2020 7:35 am I agree that you should run your own numbers. This should help. The last time I ran my numbers, FSKAX would cost me $180 per $100k more than VTSAX.
Are there any instructions on how to use this spreadsheet? I can't seem to find either FSKAX or VTSAX anywhere among the list. Thanks!
You will have to add them yourself. I linked to that spreadsheet in particular because it’s easier than fixing triceratop’s original. Just plug in the same information as the others listed.
Cash
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Cash »

CaptainJ wrote: Sun Feb 02, 2020 7:47 am Cash, that difference of $180 per $100K: is that overall, or per tax year?
Per year, though that’s for 2018 and based on my marginal tax rate (top federal, no state). The numbers will change every year, so the best you can do is make a decision based on historical info.
Last edited by Cash on Sun Feb 02, 2020 8:29 am, edited 1 time in total.
Cash
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Cash »

UpperNwGuy wrote: Sun Feb 02, 2020 7:43 am
Cash wrote: Sun Feb 02, 2020 7:35 am I agree that you should run your own numbers. This should help. The last time I ran my numbers, FSKAX would cost me $180 per $100k more than VTSAX.
I suspect your numbers are now out of date. You should run your numbers again to include 2019.
Since I don’t own the fund, I’ll have to wait for the new annual report to come out unless you know of another source.
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by MotoTrojan »

I would never own a mutual fund not made by Vanguard in taxable, but maybe that is just me.

I only use ETFs.
Chip
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Chip »

Here is the per share information I have for 2018. No guarantee that it is accurate, so you may want to search for source documents to verify.

Code: Select all

Ticker symbol   	      FSKAX	   VTI
				
QDI %	                      95.290%	94.004%
Qualified  dividends	     1.44408	2.44844
Non-qualified divs.  	     0.07003	0.15617
STCG			     0.00135	0.00000
LTCG			     0.27399	0.00000
Topic Author
CaptainJ
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by CaptainJ »

Chip wrote: Sun Feb 02, 2020 9:43 am Here is the per share information I have for 2018. No guarantee that it is accurate, so you may want to search for source documents to verify.

Code: Select all

Ticker symbol   	      FSKAX	   VTI
				
QDI %	                      95.290%	94.004%
Qualified  dividends	     1.44408	2.44844
Non-qualified divs.  	     0.07003	0.15617
STCG			     0.00135	0.00000
LTCG			     0.27399	0.00000

Thanks Chip. Correct me if I'm wrong, but I'm assuming that lower tax efficiency (%) values indicate more tax-efficient funds, and value indicates the number of basis points that taxes will have on the estimated return?
Chip
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Chip »

CaptainJ wrote: Sun Feb 02, 2020 10:11 am Correct me if I'm wrong, but I'm assuming that lower tax efficiency (%) values indicate more tax-efficient funds, and value indicates the number of basis points that taxes will have on the estimated return?
Yes, a lower number indicates a more tax efficient fund.

Trying hard to avoid being pedantic :) , but it's a percentage, not a number of basis points (1 bp = .01%)
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CaptainJ
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by CaptainJ »

Chip wrote: Sun Feb 02, 2020 9:43 am Here is the per share information I have for 2018. No guarantee that it is accurate, so you may want to search for source documents to verify.

Code: Select all

Ticker symbol   	      FSKAX	   VTI
				
QDI %	                      95.290%	94.004%
Qualified  dividends	     1.44408	2.44844
Non-qualified divs.  	     0.07003	0.15617
STCG			     0.00135	0.00000
LTCG			     0.27399	0.00000
Do you happen to have the same info for ITOT (or point me to where I can get it), by any chance?
Chip
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Chip »

CaptainJ wrote: Sun Feb 02, 2020 10:31 am Do you happen to have the same info for ITOT (or point me to where I can get it), by any chance?
https://www.ishares.com/us/library/tax

Distribution summaries are the docs you want.

Google will help you here with other funds. Search on "Name of fund family" tax information YYYY.
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by ruralavalon »

CaptainJ wrote: Sat Feb 01, 2020 8:26 pm I currently have some investments in an actively managed mutual fund with Fidelity, and I would like to transfer them into a total market index fund. For various personal reasons, I would prefer to keep my account with Fidelity rather than switching over to Vanguard. I also want to have automatic investments set up, so I would rather buy a mutual fund rather than an ETF. Given these, it seems like my 2 best options are probably either FSKAX or VTSAX, right? However, I'm not sure which one would be preferable. Since this is a taxable account, I've read that VTSAX is more tax-efficient than FSKAX. On the other hand, Fidelity charges a per-transaction fee for buying VTSAX, which I plan to do either on a bi-weekly or monthly basis. So given these two caveats, which one would you recommend for better overall returns? Would the added tax efficiency for VTSAX outweigh the additional fees, or would it be better to go with FSKAX for no fees but higher taxes from the capital gains distributions? Thanks!
In my opinion, if you want to use a Vanguard Total Stock Market Index Fund (VTSAX) then open an account at Vanguard.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
howdy007
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by howdy007 »

anil686 wrote: Sun Feb 02, 2020 7:49 am
howdy007 wrote: Sun Feb 02, 2020 4:00 am
mroe800 wrote: Sun Feb 02, 2020 3:43 am
howdy007 wrote: Sun Feb 02, 2020 3:36 amHow to place order for fractional etfs rder at fidelity. thx
This feature was just announced mere days ago - it is being rolled out to their mobile platform first. As a user of the mobile app, I do not have this feature yet.
Got it. I do not have it too, just checked but good feature to have
I did it on Friday via the mobile app. It is not explained well on the site IMO. Basically you would make a purchase like you would normally do under buy and instead of shares, highlight dollars. Put in a dollar amount for the security you would like to purchase and it gives you the shares you will buy (1.3792...) and it is done. Similar to before where you would enter a share number like 20 and it would spit out a dollar amount you would need... Hope that helps...
I believe they are rolling out in batches. I deleted app and reinstalled. Still, I do not see the new options yet. Probably you are in the initial wave.
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RootSki
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by RootSki »

Do not pay $75 do hold a Vanguard fund at Fidelity. That’s very unBoglehead-ish and a waste of $75 when you can open it at Vanguard for free.

That difference is tax efficiency between FSKAX & VTSAX is nominal. So is difference in expense ratios but the Fidelity fund is half the expense of Vanguard’s.
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by retired@50 »

CaptainJ wrote: Sun Feb 02, 2020 7:14 am Thanks for your replies all. What are your thoughts about this idea?: Transfer the lump sum from my current Fidelity mutual fund into VTSAX (for a one-time fee of $75), and then buy FSKAX with my automatic monthly investments in order to avoid recurring fees going forward. This way, I would at least get some of the tax efficiency that VTSAX provides, while only having to pay a one-time fee.

To reiterate, the reason I do not want to buy an ETF like ITOT or VTI is because I want to set up automatic investments, and to my knowledge ETFs do not allow for this. Thanks!
If you want to invest in VTSAX, why don't you just open an account at Vanguard and stop worrying about fees. Fidelity isn't designed for VTSAX investors.

Regards,
This is one person's opinion. Nothing more.
lexor
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by lexor »

My opinions have changed slightly after more analysis but I'd still use an ETF. Please see viewtopic.php?f=10&t=302611&p=4995292#p4995292
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by stan1 »

MotoTrojan wrote: Sun Feb 02, 2020 8:53 am I would never own a mutual fund not made by Vanguard in taxable, but maybe that is just me.

I only use ETFs.
I agree. IRS has favored ETFs over mutual funds on capital gains distributions for about 25 years now. Maybe it will change someday, but for now I will only use ETFs with the exception of Vanguard mutual funds that have an ETF share class that the fund shares can be converted into.
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by 1789 »

Another vote for VTI
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Ferdinand2014 »

CaptainJ wrote: Sat Feb 01, 2020 8:26 pm I currently have some investments in an actively managed mutual fund with Fidelity, and I would like to transfer them into a total market index fund. For various personal reasons, I would prefer to keep my account with Fidelity rather than switching over to Vanguard. I also want to have automatic investments set up, so I would rather buy a mutual fund rather than an ETF. Given these, it seems like my 2 best options are probably either FSKAX or VTSAX, right? However, I'm not sure which one would be preferable. Since this is a taxable account, I've read that VTSAX is more tax-efficient than FSKAX. On the other hand, Fidelity charges a per-transaction fee for buying VTSAX, which I plan to do either on a bi-weekly or monthly basis. So given these two caveats, which one would you recommend for better overall returns? Would the added tax efficiency for VTSAX outweigh the additional fees, or would it be better to go with FSKAX for no fees but higher taxes from the capital gains distributions? Thanks!
FSKAX. Stick with Fidelity. I have been with Fidelity for 23 years and have been very happy. I also do not like ETF’s.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by BuddyJet »

CaptainJ wrote: Sun Feb 02, 2020 7:14 am .......

To reiterate, the reason I do not want to buy an ETF like ITOT or VTI is because I want to set up automatic investments, and to my knowledge ETFs do not allow for this. Thanks!
At Fidelity, you can set for automatic reinvestment of etf dividends in the etf.
People say nothing is impossible. I do nothing all day.
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Dottie57 »

howdy007 wrote: Sun Feb 02, 2020 4:00 am
mroe800 wrote: Sun Feb 02, 2020 3:43 am
howdy007 wrote: Sun Feb 02, 2020 3:36 amHow to place order for fractional etfs rder at fidelity. thx
This feature was just announced mere days ago - it is being rolled out to their mobile platform first. As a user of the mobile app, I do not have this feature yet.
Got it. I do not have it too, just checked but good feature to have
I expect that you will be able to purchase a dollar amount of an ETF instead of a number of shares. Nice change.
howdy007
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by howdy007 »

mroe800 wrote: Sun Feb 02, 2020 3:43 am
howdy007 wrote: Sun Feb 02, 2020 3:36 amHow to place order for fractional etfs rder at fidelity. thx
This feature was just announced mere days ago - it is being rolled out to their mobile platform first. As a user of the mobile app, I do not have this feature yet.
Just want to report that the provision to trade fractional shares showed up in my android app. First it loaded regular ticket and at the top there is a link "...... quick ticket" and it takes to order fractional shares screen. Just FYI, I opened my new brokerage account with Fidelity about two weeks ago.
mroe800
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by mroe800 »

Showed up for me today as well, in all accounts on iOS app.
RickyGold
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by RickyGold »

Ferdinand2014 wrote: Sun Feb 02, 2020 10:52 pm
CaptainJ wrote: Sat Feb 01, 2020 8:26 pm I currently have some investments in an actively managed mutual fund with Fidelity, and I would like to transfer them into a total market index fund. For various personal reasons, I would prefer to keep my account with Fidelity rather than switching over to Vanguard. I also want to have automatic investments set up, so I would rather buy a mutual fund rather than an ETF. Given these, it seems like my 2 best options are probably either FSKAX or VTSAX, right? However, I'm not sure which one would be preferable. Since this is a taxable account, I've read that VTSAX is more tax-efficient than FSKAX. On the other hand, Fidelity charges a per-transaction fee for buying VTSAX, which I plan to do either on a bi-weekly or monthly basis. So given these two caveats, which one would you recommend for better overall returns? Would the added tax efficiency for VTSAX outweigh the additional fees, or would it be better to go with FSKAX for no fees but higher taxes from the capital gains distributions? Thanks!
FSKAX. Stick with Fidelity. I have been with Fidelity for 23 years and have been very happy. I also do not like ETF’s.

I have all my tax-deferred investments at Fidelity and am now considering funding a taxable account. I don't like ETFs...they make me tend to look at my portfolio more than I am comfortable with and for me the temptation to trade is too great. For some reason, I don't have this behavioral problem with mutual funds. Hence, I don't like ETFs and will only invest in mutual funds.

I intend to use FSKAX. I just don't think the tax-efficiency of VTI will make all that much a difference for it to be worth it, for me at least.

I will also add the Fidelity international index, and then I should be all set.
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by KT785 »

RickyGold wrote: Tue Oct 12, 2021 6:02 am I have all my tax-deferred investments at Fidelity and am now considering funding a taxable account. I don't like ETFs...they make me tend to look at my portfolio more than I am comfortable with and for me the temptation to trade is too great. For some reason, I don't have this behavioral problem with mutual funds. Hence, I don't like ETFs and will only invest in mutual funds.

I intend to use FSKAX. I just don't think the tax-efficiency of VTI will make all that much a difference for it to be worth it, for me at least.

I will also add the Fidelity international index, and then I should be all set.
I'm likewise not sure the tax benefit of FSKAX vs. VTSAX is that important . . . . however, would caution that if you already hold FSKAX (or FTIHX, etc) in any of your tax-deferred/tax-advantaged accounts then you're running the risk of a wash sale if/when you attempt any tax-loss harvesting if you intend to hold the same funds in taxable.

I hold FSKAX/FTIHX in our Roth IRAs and HSAs (proprietary target date funds in 401k) but hold VTI/VXUS in my taxable account to help facilitate tax loss harvesting (can swap in ITOT/IXUS, etc.).

KT785
RickyGold
Posts: 46
Joined: Sun Jul 12, 2020 8:06 am

Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by RickyGold »

KT785 wrote: Tue Oct 12, 2021 9:25 am
RickyGold wrote: Tue Oct 12, 2021 6:02 am I have all my tax-deferred investments at Fidelity and am now considering funding a taxable account. I don't like ETFs...they make me tend to look at my portfolio more than I am comfortable with and for me the temptation to trade is too great. For some reason, I don't have this behavioral problem with mutual funds. Hence, I don't like ETFs and will only invest in mutual funds.

I intend to use FSKAX. I just don't think the tax-efficiency of VTI will make all that much a difference for it to be worth it, for me at least.

I will also add the Fidelity international index, and then I should be all set.
I'm likewise not sure the tax benefit of FSKAX vs. VTSAX is that important . . . . however, would caution that if you already hold FSKAX (or FTIHX, etc) in any of your tax-deferred/tax-advantaged accounts then you're running the risk of a wash sale if/when you attempt any tax-loss harvesting if you intend to hold the same funds in taxable.

I hold FSKAX/FTIHX in our Roth IRAs and HSAs (proprietary target date funds in 401k) but hold VTI/VXUS in my taxable account to help facilitate tax loss harvesting (can swap in ITOT/IXUS, etc.).

KT785
Yikes! I had not thought of that...but I will need to study up on this some more...FSKAX and VTI are essentially the same...so why wouldn't the wash sale rule still apply? I would think it would apply if the funds are substantially identical, even though one is a mutual fund and the other is an ETF.

But, what I may do is to use the following for my taxable account: FXAIX AND FSGGX

FXAIX (SP 500 fund) and FSGGX (Global Ex-US) are not substantially identical to the funds in my IRA.....FXAIX is not substantially identical to FSKAX since it’s not a total market fund, and FSGGX uses a different index (does not have international small cap) thank FTIHX.

Wow, investing ain't easy....thanks KT785!
sycamore
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Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by sycamore »

RickyGold wrote: Wed Oct 13, 2021 1:37 pm ...Yikes! I had not thought of that...but I will need to study up on this some more...FSKAX and VTI are essentially the same...so why wouldn't the wash sale rule still apply? I would think it would apply if the funds are substantially identical, even though one is a mutual fund and the other is an ETF.
^^^ you hit upon a topic that Bogleheads like to argue about. Some people do consider FSKAX and VTI to be substantially identical because, for example, the funds have a very large degree of overlap.

Some people say they are not substantially identical for various reasons, e.g., different index providers and/or different implementation of the indexes. Bottom line is the IRS has not weighed in on the matter in a manner that is clear and definitive.

If you'd like to pursue the "what is substantially identical" question further, there are some existing threads for that: https://www.google.com/search?q=what+is ... eheads.org

And Vanguard has a set of "risk dimensions" for TLH/wash-sale considerations: https://advisors.vanguard.com/insights/ ... harvesting
Vanguard User
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Location: Sugar Land, Texas

Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by Vanguard User »

I have VTSAX in my taxable at Vanguard and FZROX for Roth IRA at Fidelity.
RickyGold
Posts: 46
Joined: Sun Jul 12, 2020 8:06 am

Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by RickyGold »

sycamore wrote: Wed Oct 13, 2021 3:11 pm
RickyGold wrote: Wed Oct 13, 2021 1:37 pm ...Yikes! I had not thought of that...but I will need to study up on this some more...FSKAX and VTI are essentially the same...so why wouldn't the wash sale rule still apply? I would think it would apply if the funds are substantially identical, even though one is a mutual fund and the other is an ETF.
^^^ you hit upon a topic that Bogleheads like to argue about. Some people do consider FSKAX and VTI to be substantially identical because, for example, the funds have a very large degree of overlap.

Some people say they are not substantially identical for various reasons, e.g., different index providers and/or different implementation of the indexes. Bottom line is the IRS has not weighed in on the matter in a manner that is clear and definitive.

If you'd like to pursue the "what is substantially identical" question further, there are some existing threads for that: https://www.google.com/search?q=what+is ... eheads.org

And Vanguard has a set of "risk dimensions" for TLH/wash-sale considerations: https://advisors.vanguard.com/insights/ ... harvesting
Thank you for the links! I think that I'll use funds in my taxable account that are not substantially identical to what I have in my IRAs...this way I don't need to bother with the wash sale rule. So I will use FXAIX AND FSGGX in my taxable account, and FSKAX and FTIHX in my IRAs….keep it simple!
zie
Posts: 293
Joined: Sun Mar 22, 2020 4:35 pm

Re: Taxable Account with Fidelity: FSKAX vs VTSAX?

Post by zie »

Another option, is the Fidelity ZERO funds (FZROX and friends) in your IRA/tax advantaged accounts and then you are freeing up FSKAX and friends for taxable investing.

Or use the S&P500 fund(s) if you want to stay farther away from the IRS guidelines. They exist in both the ZERO versions and in normal versions.
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