Investment question

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6d1v7x3
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Joined: Tue Oct 08, 2019 4:28 pm

Investment question

Post by 6d1v7x3 »

Hi guys one of my parents has a Roth IRA with Fidelity right now and I was thinking about moving it over to the vanguard vtsax. I don't know anything about investing but it seems like vtsax is what everyone recommends as a good index fund. Would this be a smart move and are there any tax issues that I should know about? I'm completely uneducated on the topic so please forgive me and thank you for any help.
UpperNwGuy
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Re: Investment question

Post by UpperNwGuy »

Fidelity has two index funds that are exactly the same as VTSAX. Have you checked them out?
Topic Author
6d1v7x3
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Joined: Tue Oct 08, 2019 4:28 pm

Re: Investment question

Post by 6d1v7x3 »

I believe I saw them while I was doing my initial research. However, would moving to vanguard cause any tax issues or is it a fairly simple process?
alex_686
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Re: Investment question

Post by alex_686 »

First, write up a Investment Policy Statement (IPS). What is your parents goals, current assets, risk tolerance, etc. I am skeptical that 100% equity portfolio is the correct choice for a novice investor who is latter in life. Or maybe it is. Target Date fund or 60% equity / 40% bond tends to be the default choice. But it is next to impossible to say without doing the foundational work.

https://www.bogleheads.org/wiki/Investm ... _statement
UpperNwGuy wrote: Mon Nov 16, 2020 5:41 pm Fidelity has two index funds that are exactly the same as VTSAX. Have you checked them out?
I would not say exactly the same. There are some differences. That being said, most index funds offered by the major providers are of high quality. It is like debating the differences between the Honda Accord and the Toyota Camry.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
Topic Author
6d1v7x3
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Joined: Tue Oct 08, 2019 4:28 pm

Re: Investment question

Post by 6d1v7x3 »

This is not the only money that this person has. This is what they are willing to risk and we've determined that the vanguard vtsax is the way to go. I'm just asking about the tax issue. I appreciate your help though.
UpperNwGuy
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Re: Investment question

Post by UpperNwGuy »

6d1v7x3 wrote: Mon Nov 16, 2020 5:45 pm I believe I saw them while I was doing my initial research. However, would moving to vanguard cause any tax issues or is it a fairly simple process?
Why move to Vanguard if you can get the same thing at Fidelity? Full disclosure: I have accounts at both Vanguard and Fidelity and have held VTSAX and FSKAX. I have been pleased with both of them.
tibbitts
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Re: Investment question

Post by tibbitts »

6d1v7x3 wrote: Mon Nov 16, 2020 6:11 pm This is not the only money that this person has. This is what they are willing to risk and we've determined that the vanguard vtsax is the way to go. I'm just asking about the tax issue. I appreciate your help though.
There is no reason to move these funds to Vanguard. "We" may have determined that VTSAX is the way to go, but "we" are wrong, given the situation you have described.
Topic Author
6d1v7x3
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Re: Investment question

Post by 6d1v7x3 »

UpperNwGuy wrote: Mon Nov 16, 2020 6:12 pm
6d1v7x3 wrote: Mon Nov 16, 2020 5:45 pm I believe I saw them while I was doing my initial research. However, would moving to vanguard cause any tax issues or is it a fairly simple process?
Why move to Vanguard if you can get the same thing at Fidelity? Full disclosure: I have accounts at both Vanguard and Fidelity and have held VTSAX and FSKAX. I have been pleased with both of them.
Could you please explain to me what the downside would be of moving to Vanguard? Also I forgot to mention that there is money in both a Roth and traditional IRA at fidelity.
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arcticpineapplecorp.
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Re: Investment question

Post by arcticpineapplecorp. »

6d1v7x3 wrote: Mon Nov 16, 2020 6:19 pm
UpperNwGuy wrote: Mon Nov 16, 2020 6:12 pm
6d1v7x3 wrote: Mon Nov 16, 2020 5:45 pm I believe I saw them while I was doing my initial research. However, would moving to vanguard cause any tax issues or is it a fairly simple process?
Why move to Vanguard if you can get the same thing at Fidelity? Full disclosure: I have accounts at both Vanguard and Fidelity and have held VTSAX and FSKAX. I have been pleased with both of them.
Could you please explain to me what the downside would be of moving to Vanguard? Also I forgot to mention that there is money in both a Roth and traditional IRA at fidelity.
slow down.

in your first post you say move it from Roth IRA with Fidelity to vtsax (vanguard). but the terms roth IRA and vtsax are not the same thing. The Roth IRA is the account. VTSAX is the investment you put into the account.

that said, you've been asked the question a couple times...why do you need to move from Fidelity to Vanguard?

If they don't have accounts there, why move?

If they do, that might make sense to consolidate, but if you can buy similar funds (as vtsax) in their already existing Fidelity IRAs, then why move the companies where the account is held, when you can just put the right investment in the account that already exists with Fidelity?
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
Topic Author
6d1v7x3
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Re: Investment question

Post by 6d1v7x3 »

Okay fair enough let's forget about moving the vanguard and stick with fidelity. There is money sitting in a traditional IRA and a Roth IRA in the Fidelity account and I'm just trying to get things straightened out. But I concede that leaving things in fidelity would be fine. I'm looking at the asset allocation of the traditional IRA right now and it says moderate. It also lists exactly how it's divided up. How would I find out if this is fskax or some other index fund?
pingo
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Re: Investment question

Post by pingo »

6d1v7x3 wrote: Mon Nov 16, 2020 5:40 pmWould this be a smart move and are there any tax issues[?]

Hello, 6d1v7x3!

As to the "smart move" part, you see that the responses favor staying with Fidelity. Without knowing more, I agree with staying put.

As to "tax consequences," there are no tax consequences, if you do it right, which is not difficult.

1. Vanguard can guide you through the moving the Roth IRA over. It's still a Roth IRA; no tax consequences.

2. Funds also can be purchased or liquidated inside the Roth IRA with no tax consequences. In fact, a move to Vanguard will force all Roth IRA assets to be liquidated. No problem, there, regardless.

3. Likewise, if certain requirements are met, withdrawals from the Roth IRA are not taxed, i.e., one must be at least 59 1/2 years old and withdrawls must be from contributions that have been in the Roth longer than 5 years).

I encourage you and/or your parent to consider staying with Fidelity and using Fidelity's excellent lineup of index funds.

A good reason to move to Vanguard:
- (a) if there has been a disruption in the relationship with Fidelity. (It happens.)
- (b) to reduce the number of accounts one has.
- (c) to obtain types of funds/asset classes that cannot be had through Fidelity.

We don't know much, but I have to assume that your parent is already familiar with Fidelity's customer service, or web platform, etc. which supports staying put.
Last edited by pingo on Mon Nov 16, 2020 10:37 pm, edited 2 times in total.
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midareff
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Re: Investment question

Post by midareff »

6d1v7x3 wrote: Mon Nov 16, 2020 5:40 pm Hi guys one of my parents has a Roth IRA with Fidelity right now and I was thinking about moving it over to the vanguard vtsax. I don't know anything about investing but it seems like vtsax is what everyone recommends as a good index fund. Would this be a smart move and are there any tax issues that I should know about? I'm completely uneducated on the topic so please forgive me and thank you for any help.
#1. Never ever make investment decisions on your perception of what everyone recommends.

#2. If "I don't know anything about investing" must lead us to .... "I was thinking about moving it over to the vanguard vtsax."

#3. So if you know nothing why are you moving your parents money around?
humblecoder
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Re: Investment question

Post by humblecoder »

6d1v7x3 wrote: Mon Nov 16, 2020 5:40 pm Would this be a smart move ...
I would say "neither smart nor dumb". What you are asking is the equivalent of asking whether you should get vanilla ice cream or chocolate ice cream. Both are tasty, so it comes down to your own personal preference.

As others have pointed out, you can invest in an equivalent fund at Fidelity which is just as good. However, if you prefer Vanguard, then go for it. I don't think anybody here can fault that decision either.
6d1v7x3 wrote: Mon Nov 16, 2020 5:40 pm ...are there any tax issues that I should know about?
If you are transferring assets that are in an IRA and you are keeping them in an IRA, then no. However, I am not a tax attorney or CPA so you keep that in mind.

EDIT:
I retract my advice above about "neither smart nor dumb". I saw that the OP posted about how the assets at Fidelity have a "moderate" asset allocation. Going from that to VTSAX (100% stocks) doesn't seem wise to me (at least without knowing more info). Based upon that additional piece of info I'd answer by saying "not a smart move".
RyeBourbon
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Re: Investment question

Post by RyeBourbon »

6d1v7x3 wrote: Mon Nov 16, 2020 5:40 pm Hi guys one of my parents has a Roth IRA with Fidelity right now and I was thinking about moving it over to the vanguard vtsax. I don't know anything about investing but it seems like vtsax is what everyone recommends as a good index fund. Would this be a smart move and are there any tax issues that I should know about? I'm completely uneducated on the topic so please forgive me and thank you for any help.
You can buy VTI at Fidelity which is the ETF version of VTSAX. If you are selling assets in the Roth IRA and buying VTI in it, there are no tax consequences. I'm not going to suggest whether it's a smart move because I don't know what your parent's situation is, i.e. when they will need to use this money.
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arcticpineapplecorp.
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Re: Investment question

Post by arcticpineapplecorp. »

vtsax is all stock.

does your parent want all stocks?

or do they want a mix of stocks and bonds?

if the latter, then vtsax is by itself not the right choice.

but it could be part of an overall portfolio.

there are target date retirement funds that contain vtsax or a similar fund but also bonds as well.

these types of funds exist at fidelity. they're called fidelity freedom index funds.

but if you go the target date route with fidelity, be sure to get the fidelity freedom INDEX fund products and not the fidelity freedom fund product (the latter of which are not index and are more expensive).

you dig?
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
pasadena
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Re: Investment question

Post by pasadena »

6d1v7x3 wrote: Mon Nov 16, 2020 6:37 pm Okay fair enough let's forget about moving the vanguard and stick with fidelity. There is money sitting in a traditional IRA and a Roth IRA in the Fidelity account and I'm just trying to get things straightened out. But I concede that leaving things in fidelity would be fine. I'm looking at the asset allocation of the traditional IRA right now and it says moderate. It also lists exactly how it's divided up. How would I find out if this is fskax or some other index fund?
There's a menu at the top of the Summary page. You will see the details in the Positions tab.
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