Active managed account

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
iowa77
Posts: 5
Joined: Thu Feb 01, 2018 9:04 pm

Active managed account

Post by iowa77 » Thu Jul 11, 2019 4:05 pm

Hello,

In the last year I have embraced simplicity, because of this site and many other sources, and I have come to my finial barrier to lower costs and streamline. I have an old American Funds account that I would have about 2K in taxes on if I were to sell off and move to two funds( VTSAX & VTIAX). Should I just go ahead and complete the journey or wait for a dip to sell. I can easily pay the taxes next April, maybe I just answered this myself?

Thanks

123
Posts: 4805
Joined: Fri Oct 12, 2012 3:55 pm

Re: Active managed account

Post by 123 » Thu Jul 11, 2019 4:12 pm

If you wait for a dip to sell for lower taxes your after-tax gain will also be lower. Paying taxes can be a good thing, it indicates that whatever you bought increased in value.
The closest helping hand is at the end of your own arm.

User avatar
Sandtrap
Posts: 7517
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Active managed account

Post by Sandtrap » Thu Jul 11, 2019 4:16 pm

iowa77 wrote:
Thu Jul 11, 2019 4:05 pm
Hello,

In the last year I have embraced simplicity, because of this site and many other sources, and I have come to my finial barrier to lower costs and streamline. I have an old American Funds account that I would have about 2K in taxes on if I were to sell off and move to two funds( VTSAX & VTIAX). Should I just go ahead and complete the journey or wait for a dip to sell. I can easily pay the taxes next April, maybe I just answered this myself?

Thanks
Suppose the market continues to rise from now until April?
j
Wiki Bogleheads Wiki: Everything You Need to Know

HawkeyePierce
Posts: 314
Joined: Tue Mar 05, 2019 10:29 pm
Location: New Zealand

Re: Active managed account

Post by HawkeyePierce » Thu Jul 11, 2019 4:25 pm

I would just do it now. What if it goes up another 10% and then only dips 5%?

Even if it does dip 10% next week, how much is that really saving you in tax? Is it worth the trouble?

Personally, I'd take the peace of mind that comes from streamlining all your investments.

User avatar
oldzey
Posts: 1267
Joined: Sun Apr 13, 2014 8:38 pm
Location: Land of Lincoln

Re: Active managed account

Post by oldzey » Thu Jul 11, 2019 5:07 pm

Here is a good link comparing the two companies: https://www.investopedia.com/articles/i ... -group.asp

Full disclosure: I rolled my IRA from American Funds to Vanguard over 20 years ago.
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

Topic Author
iowa77
Posts: 5
Joined: Thu Feb 01, 2018 9:04 pm

Re: Active managed account

Post by iowa77 » Thu Jul 11, 2019 5:12 pm

Thanks, I believe I have my answer. Several years and suck cost of the load have me motivated to just do it.


Thanks

User avatar
grabiner
Advisory Board
Posts: 24580
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Active managed account

Post by grabiner » Thu Jul 11, 2019 5:46 pm

You don't need to wait for the dip, because you will get a tax benefit from any dip.. Suppose that you have a fund with a $40K basis which you sell for $50K, and then the market drops by 20%, dropping your replacement fund to $40K. You can harvest the loss, so you have a $10K capital loss to offset your $10K capital gain (if in the same year) or to reduce your taxes in the future (if the loss was in the year after the gain). Conversely, if the market rises 20%, you have an extra $10K in capital gains for waiting; if you switch, you have a $10K lower basis, but you won't pay tax on that $10K until you sell years in the future.
Wiki David Grabiner

StealthRabbit
Posts: 271
Joined: Sat Jun 13, 2009 1:25 am

Re: Active managed account

Post by StealthRabbit » Thu Jul 11, 2019 6:44 pm

Sell on strength, taxes are a good thing! (you have gains)

Many ways to mitigate taxes, and you have 6 months to figure that out. (run tax scenarios several times / yr)

Need to offset gains during a specific tax year?... Consider consolidating contributions (several yrs) , or deductible expenses, or doing any loss harvesting.

My Donor Advised fund (DAF) was a great tool for stashing appreciated stocks during my earning yrs (long time ago, I started using that tool in my early 30's)) DAF now allows for gifting in perpetuity, even when I have no income (Early retired, pre-medicare)
Do you have a business LLC or investment props? Good time to add to valuations by doing some capital spending (Harvest those gains when you sell business or properties)

In Really high earning yrs, I used section 179 (accelerated depreciation) on business assets, and 1031'like-kind' exchanges.

Topic Author
iowa77
Posts: 5
Joined: Thu Feb 01, 2018 9:04 pm

Re: Active managed account

Post by iowa77 » Fri Jul 12, 2019 3:16 pm

Thanks for the replies-sold it today.

Post Reply