Getting out of advisor picked funds when market is going down

[sucrosomialmagnesium]

When I took over my accounts several months ago I got out of the funds that were at a loss or near break even. But I didn't touch a bunch of them because of unrealized gains.

Now the market is starting to go down some of the funds are getting close to the breakeven point.

If you were in my position, would you sell those funds when the unrealized gain is minimal or none, and then immediately rebuy into the desired index fund?

To clarify, I would buy my desired mutual fund the same day as selling the other fund. No sitting in cash trying to time things.

It makes sense to me but just seeing if there's any downside to this.
Thank you

[arcticpineapplecorp.]

When I took over my accounts several months ago I got out of the funds that were at a loss or near break even. But I didn't touch a bunch of them because of unrealized gains.

Now the market is starting to go down some of the funds are getting close to the breakeven point.

If you were in my position, would you sell those funds when the unrealized gain is minimal or none, and then immediately rebuy into the desired index fund?

To clarify, I would buy my desired mutual fund the same day as selling the other fund. No sitting in cash trying to time things.

It makes sense to me but just seeing if there's any downside to this.
Thank you

is this a taxable account? If not, then it doesn't matter what you do.

Are these funds you want to get rid of and not buy more of?

if so, yes, you can sell them when they are at break even to not owe taxes on sale.

If these are funds you want to keep, why wouldn't you wait until there are losses so you can at least tax loss harvest? (you can also do that with funds you don't want to keep too).

Then since you don't plan to sell anything for a gain, you can use up to $3000 in losses (if you harvested that much or more) to offset ordinary income up to $3000 per year until the losses are used up. Depending on your tax bracket that $3000 could save you $600 in federal income taxes if in the 22% bracket, or even more if in a higher bracket.

Then you take the proceeds and buy a not substantially identical fund so you remain invested in what you want (basically) so you profit when the market recovers, but you got to claim the loss on your taxes. Win/win I'd say. So if you own VTI and it has unrealized losses, you'd sell and buy VOO instead.

what do you think about that?

[sucrosomialmagnesium]

Taxable account. Yeah, I don't want these funds anymore. Especially because they like dumping capital gains in December every year

Do you think it's better to try to TLH at a loss or just sell when it's about break even?

Break even means more money to put into the desired fund. If it goes down so much i'm TLH then there is less to put into future growth?

[UpperNwGuy]

If you were in my position, would you sell those funds when the unrealized gain is minimal or none, and then immediately rebuy into the desired index fund?

Yes, I would do this.

[RetiredAL]

Taxable account. Yeah, I don't want these funds anymore.

Do you think it's better to try to TLH at a loss or just sell when it's about break even?

Break even means more money to put into the desired fund. If it goes down so much i'm TLH then there is less to put into future growth?

You need to evaluate (guess) as to which of those will those funds decline faster or about the same as the SP500.

If faster, it may behoove you to sell (swap) sooner, even if you have to book some Cap Gains. This would depend on your long term gain tax rate + your state tax rate. If your LTCG rate is 0, it's likely a no brainer.

If they will decline about the same or slower, it's just a side step, so you can wait until it's break-even, or even a at a loss.

I used a dip (was fortunate it came along) many years ago to our advantage in changing my Dad's recently managed now self directed to simplify the near 50 holdings to BH compliant holdings.

[retiredjg]

Taxable account. Yeah, I don't want these funds anymore. Especially because they like dumping capital gains in December every year

Do you think it's better to try to TLH at a loss or just sell when it's about break even?

What if you wait to TLH and the market goes back up? How would you feel then?

You have an opportunity to clean up your portfolio with less tax cost than before. You can gamble hoping for better numbers (which you may not get) or you can just do it and call it good enough.

Fear and greed are factors, one way or the other, in most investing mistakes. You've got both going on here. Try to take fear and greed out of the equation and you will see what you need to do.

[mhadden1]

If you were in my position, would you sell those funds when the unrealized gain is minimal or none, and then immediately rebuy into the desired index fund?

Yes, I would do this.

+1
If you can sell unsuitable funds you don't want, to buy suitable funds that you do want, without tax consequences, that's a win. At some point, if you have losses, you might be able to do tax-loss harvesting if you want.

[WeakOldGuy]

When I took over my accounts several months ago I got out of the funds that were at a loss or near break even. But I didn't touch a bunch of them because of unrealized gains.

Now the market is starting to go down some of the funds are getting close to the breakeven point.

If you were in my position, would you sell those funds when the unrealized gain is minimal or none, and then immediately rebuy into the desired index fund?

I definitely would. I just tax loss harvested today (again). I would sell those with minimal LTCG and do as you proposed. Think of it as a good opportunity to readjust your portfolio at little tax cost.

[sucrosomialmagnesium]

Got rid of two today that now had gains under 1000. If the market goes down further I have two more ready to get to go.

[Bug]

Yes and buy no load index funds. You will be glad you did 20+ years from now.

[grabiner]

Taxable account. Yeah, I don't want these funds anymore. Especially because they like dumping capital gains in December every year

Do you think it's better to try to TLH at a loss or just sell when it's about break even?

Sell now. If the market continues to go down, you'll be able to harvest the loss in the replacement fund, so you won't have missed any tax benefit. But if you hold and the market goes up, you will increase the cost of switching.

It is likely to also be worth selling funds which do have gains, although you may want to wait for those gains to be long-term; the one-time cost in capital-gains tax will be less than the ongoing cost in higher expenses and taxes for continuing to hold the funds.