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Index funds ARE mutual funds. For specific advice you'll have to post what fund(s) the money is invested into. Then we can tell you how good/bad that is.
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Apr 20, 2023 21:03
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mrmcd posted:Isn't the 7 day yield number supposed to be after fees and expenses? Yes, which is why SPAXX is yielding 4.48% net vs VMFXX yielding 4.76% net. They're not holding the exact same things but are fairly similar funds (expenses aside).
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Apr 20, 2023 21:04
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Motronic posted:Index funds ARE mutual funds. It's apparently all stuck into a single fund. Columbia Large Cap Growth Fund A
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Apr 20, 2023 21:13
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Apr 20, 2023 21:20
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Popete posted:It's apparently all stuck into a single fund. Without looking any deeper, that has an expense ratio of 0.98%. That's super, super high for an index fund. That alone should make you shop around. As a comparison to other often-recommended index funds, VTSAX (total stock market) is 0.04%, VLCAX (large cap) is 0.05%.
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Apr 20, 2023 21:20
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Yeah I was just using Vanguards comparison tool and had it up against VTI (which is what I mostly invest in) and she really ought to move her money. Would it be fine to just straight up sell all her LEGAX holdings and buy a diverse mix of Vanguard index funds? I assume that would cost a lot in taxes, is there a smarter way to go about this?
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Apr 20, 2023 21:22
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Popete posted:It's apparently all stuck into a single fund. Switching to a whole market index fund would save you on expense ratio - that one takes .98% of your money each year for expenses, which is quite high. To give a counter example, I'm mainly in VTI, which is .03%. Countering that is that your current fund actually has someone making changes and decisions to try to maximize return, whereas something like VTI essentially just holds onto a predetermined set of stocks. The general wisdom is that that isn't worth it; if someone could reliably outperform the stock market then they'd be too busy cruising around in their private yacht to manage a fund. And... well, performance seems to bear that out. VTI is up 49% over the last 5 years whereas that fund is up 15.8%.
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Apr 20, 2023 21:24
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Tax treatment is a different question but the fund itself is probably not optimal.
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Apr 20, 2023 21:27
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Epitope posted:
I just googled CDSC and oh my god.
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Apr 20, 2023 21:28
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Also lol @ the "up to" 5.75% sales charge. A quick skim through the prospectus makes it unclear exactly what you would pay (it depends on share class, investment size, and holding period), but paying anything over zero % is pretty terrible in 2023.
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Apr 20, 2023 21:28
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Bremen posted:The general wisdom is that that isn't worth it; if someone could reliably outperform the stock market then they'd be too busy cruising around in their private yacht to manage a fund. And... well, performance seems to bear that out. VTI is up 49% over the last 5 years whereas that fund is up 15.8%. On the contrary, I think you'll find they made 3500 a year, instead of VTI's pidly 100. Plus they might get to nab 20,000 if OP is feeling spiteful
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Apr 20, 2023 21:33
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DNK posted:SPAXX has like a .48% ER so even tho it’s returning ~4.8% it’s actually more like 4.3% which you can do better on if you’re willing to spend an ounce of effort. It’s ok if you don’t wanna micromanage your cash that much. In addition to the yield already being post-fee, it also has an interesting niche as an auto-liquidating core position in that Fidelity cash management account that raminasi mentioned a bit back. So even if other vehicles could return slightly more on your e-fund, they can't give you what is essentially a checking account with 4.8% interest.
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Apr 20, 2023 23:13
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Unsinkabear posted:In addition to the yield already being post-fee, it also has an interesting niche as an auto-liquidating core position in that Fidelity cash management account that raminasi mentioned a bit back. So even if other vehicles could return slightly more on your e-fund, they can't give you what is essentially a checking account with 4.8% interest. Just came to ask about this. On thread / dad advice I opened a separate personal account in Fidelity (previously they just had my retirement stuff) and started moving money in from my Wells Fargo savings account. Currently I'm just splitting everything 50/50 between SPAXX and SPRXX because *shrug* why not, with a very vague plan to eventually move just about all of my WF savings account into it. I guess just by opening the account Fidelity automatically sends you a debit card so now I have another one of those; one question I had was how it pulled money out of the account to cover charges. I assume anything still listed in the Core position goes first, but then if it needs more will it automatically start selling stuff out of SPA/RXX? If so would it sell from one account over the other?
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Apr 21, 2023 00:19
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Takes No Damage posted:Just came to ask about this. On thread / dad advice I opened a separate personal account in Fidelity (previously they just had my retirement stuff) and started moving money in from my Wells Fargo savings account. Currently I'm just splitting everything 50/50 between SPAXX and SPRXX because *shrug* why not, with a very vague plan to eventually move just about all of my WF savings account into it. Not sure about SPRXX, not all funds are eligible for auto-liquidation. Their support team is very active on Reddit, so it may be worth a post there to get official confirmation of specifics. They provided a legit answer to every question I asked, but I was mostly concerned about any hidden consequences (there aren't any fwiw) to just sticking all my money in SPAXX and letting it auto-liquidate every time something is spent.
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Apr 21, 2023 00:35
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Popete posted:It's apparently all stuck into a single fund. Our pals at IBKR actually have a pretty useful tool for someone in your position. Let's say you actually like the things LEGAX is invested in and would like the substitute fund to hew pretty close to it.  The iShares Core S&P 500 ETF (IVV) is 97% correlated to that Columbia thing, it's liquid as hell, and you save 95 bps in expenses. That's assuming you really like the large cap stuff LEGAX holds. If you are just aiming to move into some more balanced portfolio, the world's your oyster. From an expense perspective it would be difficult to do worse than what she's already in.
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Apr 21, 2023 01:55
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Much appreciated, we will have to do some more research but yes we are looking to diversify it into lower EP index funds like VTI and a few others. I guess the only outtstanding question left is how best to do this, should she just sell off everything in the mutual fund and repurchase index funds? Is it better to do this more slowly over time due to some tax advantage? May be better to ask that in the tax thread though.
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Apr 21, 2023 02:00
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Popete posted:Much appreciated, we will have to do some more research but yes we are looking to diversify it into lower EP index funds like VTI and a few others. Depends on cost basis and where the funds are currently held. Could be a significant tax liability. Or nothing!
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Apr 21, 2023 02:32
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Subvisual Haze posted:The current yield curve is...something. I guess the market is pricing in debt-ceiling uncertainty in the next couple months and also recession forced rate cuts somewhere around 1-2 years from now? Pretty wild chart here (big red dot is today):  In theory the fed funds rate is supposed to put a floor on overnight rates. 1 month treasuries arent exactly overnight, but they are very short so most of the time they yield pretty close to the fed rate. I'll probably sell off my ~1 month treasuries tomorrow and buy into the 3/6 month auction this weekend. Not really a big difference in dollars but if the market wants to let me pull forward some returns, might as well take it.
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Apr 21, 2023 05:10
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Popete posted:She has a meeting setup to talk with someone whose helped there family setup this mutual fund but obviously they are likely to be biased to tell her to keep the money in the mutual fund. Epitope posted:
When she has a meeting with whomever setup her mutual fund, please be sure to have pink slip ready to fire said person because holy moley is this mutual fund a crime (metaphorically , unfortunately not actually a crime). Not your fault or your significant other’s fault at all, good for you for doing your research. But yeah, I would mention a general “uhhh, have you looked at what your advisor is costing you?” Question to her parents. Although people get very stubborn about sunk costs, so obviously it’s out of your control if they insist on sticking with ridiculously expensive funds like this.
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Apr 21, 2023 12:27
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Popete posted:It's apparently all stuck into a single fund. It's a collection of only like 40 stocks. Interesting that they don't hold any of Facebook/Meta.
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Apr 21, 2023 12:33
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Duckman2008 posted:When she has a meeting with whomever setup her mutual fund, please be sure to have pink slip ready to fire said person because holy moley is this mutual fund a crime (metaphorically , unfortunately not actually a crime). Are there any ready comparison tools that OP can use to give the SO/parents a visual representation of what their holdings would have been worth over time (or will be worth in the future) if they'd put it into something like VSTAX or a simple target date fund, vs a second line for their current scenario of having 1% stolen from them every single year for literally no benefit? Even the most educated brains are bad at conceptualizing numbers, especially compounding interest, so they're probably hearing that 1% and shrugging that it's such a small number you're overreacting to. But graphs and hard numbers like "this person and their funds will cost you $300k over the next few decades" are much harder to dismiss than you are, and more likely to focus their anger/annoyance/stubbornness in the right direction. Unsinkabear fucked around with this message at 14:42 on Apr 21, 2023 |
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Apr 21, 2023 14:05
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CubicalSucrose posted:Depends on cost basis and where the funds are currently held. Could be a significant tax liability. Or nothing! Assuming these are all in a non-tax-advantaged brokerage account.
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Apr 21, 2023 14:09
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Duckman2008 posted:When she has a meeting with whomever setup her mutual fund, please be sure to have pink slip ready to fire said person because holy moley is this mutual fund a crime (metaphorically , unfortunately not actually a crime). This is key. Whenever her parents set this up she needs to move all the money to vanguard/fidelity/Schwab. If they are putting her money in this fund just imagine what else they are doing to skim more in their pockets.
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Apr 21, 2023 14:11
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Duckman2008 posted:When she has a meeting with whomever setup her mutual fund, please be sure to have pink slip ready to fire said person because holy moley is this mutual fund a crime (metaphorically , unfortunately not actually a crime). When she brought this up with her mom who handles the family financials she was fully on board and agreed it was a good idea. The parents setup these funds when they retired and sold the family business so I think they just went with whatever the mutual fund adviser told them at the time and nobody really did much else with it. She's talking with her other siblings who have similar accounts and they are also looking into redistributing their funds as well so there isn't really any resistance to this beyond just getting people to do it and bite the tax bullet. But yeah the more I look into this the more I'm annoyed by the financial advisor at Amerprise who did not advice them to do anything different but stick a bunch of money into an overpriced single mutual fund. My partner did have a brief initial call with him and came away with a bad impression as he was kind of talking down to her. I doubt she will be keeping her money in that account, she already has another personal investment account she has been buying ETFs with so likely just moving it over to that.
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Apr 21, 2023 17:46
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Popete posted:When she brought this up with her mom who handles the family financials she was fully on board and agreed it was a good idea. The parents setup these funds when they retired and sold the family business so I think they just went with whatever the mutual fund adviser told them at the time and nobody really did much else with it. She's talking with her other siblings who have similar accounts and they are also looking into redistributing their funds as well so there isn't really any resistance to this beyond just getting people to do it and bite the tax bullet. Most of the people who are "financial advisors" are not qualified to do their jobs, because if they were, they could do something far more lucrative. It's really a problem. They're also not fiduciaries, generally, and often get bonuses or commission for getting people to buy certain products. It's not like they even get any kind of reward if their clients funds do well, so they really have no incentive to give good advice, nor the capacity to do so, and while they are not particularly financially literate, they are generally probably less financially illiterate than most people, so like a lot of people with specialized complex knowledge with it's own jargon (DRs, Engineers, Architects, Lawyers, etc..) they can be pricks, because people are ignorant of an area they know about but the person generally doesn't.
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Apr 21, 2023 17:56
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pseudanonymous posted:Most of the people who are "financial advisors" are not qualified to do their jobs, because if they were, they could do something far more lucrative. It's really a problem. They're also not fiduciaries, generally, and often get bonuses or commission for getting people to buy certain products. It's not like they even get any kind of reward if their clients funds do well, so they really have no incentive to give good advice, nor the capacity to do so, and while they are not particularly financially literate, they are generally probably less financially illiterate than most people, so like a lot of people with specialized complex knowledge with it's own jargon (DRs, Engineers, Architects, Lawyers, etc..) they can be pricks, because people are ignorant of an area they know about but the person generally doesn't. Well and this is sort of getting outside the realm of this thread but my partner comes from an immigrant family and when she got on a call with this guy he asked "what's your capacity for video calls" as if she an attorney did not know how to use Zoom (she's on video calls a large chunk of her work day). So there could be an assumption by this advisor that her family doesn't really know what they are doing.
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Apr 21, 2023 18:02
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Even with egregious fees, investing in a mutual fund like that is probably going to do better than most other things people invest in.
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Apr 21, 2023 19:08
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"what's your capacity for x" is weird corp speak for sure but lots of people don't like video calls or don't want to do them or can't for various reasons so i don't think that's such a weird ask.
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Apr 21, 2023 19:45
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but also these businesses operate by creating personal connections and convincing people like my mother in law to stick with them because they're friendly and nice and seem smart and have a fancy office so being condescending to your clients is like, super stupid and destructive, this advisor seems like a pretty terrible person at their own job lol
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Apr 21, 2023 20:04
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Fair enough, I wasn't on the call just know she came away annoyed by the guy. Either way I don't think she actually needs to talk with anyone at Ameriprise she can just sell off what she has and transfer the funds to her Ameritrade account. I did see the fund has a CDSC max of 5.75% is there anything she needs to do to avoid paying that?
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Apr 21, 2023 20:08
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The key thing for taxes is to know the cost basis for her shares, and when she bought them. Shares that cost less when she bought them than the current price when she sells them, in a non-tax-advantaged account (sounds like this is one of those), will be realizing profits in this calendar year, which she will likely have to pay taxes on - either short term or long term capital gains taxes, depending on whether they were held for more or less than a year. The capital gains taxes could be offset by realized capital losses, if she has assets that have lost value that she can also sell this calendar year. The exact tax rate will depend on her income. She should consult with a tax person to be sure before selling shares. This is not really an emergency, so waiting a couple of weeks to chat with a tax person is likely worthwhile.
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Apr 21, 2023 20:10
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Leperflesh posted:The key thing for taxes is to know the cost basis for her shares, and when she bought them. Shares that cost less when she bought them than the current price when she sells them, in a non-tax-advantaged account (sounds like this is one of those), will be realizing profits in this calendar year, which she will likely have to pay taxes on - either short term or long term capital gains taxes, depending on whether they were held for more or less than a year. The capital gains taxes could be offset by realized capital losses, if she has assets that have lost value that she can also sell this calendar year. The exact tax rate will depend on her income. She should consult with a tax person to be sure before selling shares. This is not really an emergency, so waiting a couple of weeks to chat with a tax person is likely worthwhile. Yes we need to sit down and figure this out but I do know she has had this account since ~2016 and hasn't done anything with it. So that should mean everything qualifies as long term capital gains correct? Or does action within the mutual fund reset that?
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Apr 21, 2023 20:17
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pmchem is bullying me in the US Tax thread saying I shouldn't have Mutual Funds in my taxable brokerage, but I could have ETFs, but I don't know why. Why one over the other? I'm 100% at fidelity with a blend of FSKAX and FSPSX in my taxable account.
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Apr 21, 2023 21:21
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H110Hawk posted:pmchem is bullying me in the US Tax thread saying I shouldn't have Mutual Funds in my taxable brokerage, but I could have ETFs, but I don't know why. Why one over the other? I'm 100% at fidelity with a blend of FSKAX and FSPSX in my taxable account. https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds
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Apr 21, 2023 21:23
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Popete posted:Yes we need to sit down and figure this out but I do know she has had this account since ~2016 and hasn't done anything with it. So that should mean everything qualifies as long term capital gains correct? Or does action within the mutual fund reset that? The cost basis of shares of a mutual fund is based on purchases and sales of shares of the fund, not transactions the fund managers make to the securities held by the fund. Funds can also pay dividends, which are taxable. It was not clear to me whether she had been purchasing more shares over time. If all of her shares have been held since 2016, they're all long-term capital gains. Probably. I am not a tax expert. Please don't make transactions of hundreds of thousands of dollars that can have tax implications of thousands of dollars in taxes based on the advice of strangers on a comedy web forum. She should consult her tax person to be sure that there is nothing special or weird in this specific situation.
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Apr 21, 2023 21:33
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Looks like a slim advantage in reduced tax drag if the mutual fund has a capital gains event. Intra-day trading and dealing with bid/ask spreads isn't useful to me, and everything is $0 fee anyways. Right?
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Apr 21, 2023 21:36
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H110Hawk posted:Looks like a slim advantage in reduced tax drag if the mutual fund has a capital gains event. Intra-day trading and dealing with bid/ask spreads isn't useful to me, and everything is $0 fee anyways. Right? Yes, it's micromanging efficiency. You're fine. Depending on unrealized gains vs expected holding time you could easily end up worse off taking a tax hit now to make this type of optimization. That being said, you are better off using the ETF version for any additional investment from now on.
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Apr 21, 2023 21:45
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H110Hawk posted:pmchem is bullying me in the US Tax thread saying I shouldn't have Mutual Funds in my taxable brokerage, but I could have ETFs, but I don't know why. Why one over the other? I'm 100% at fidelity with a blend of FSKAX and FSPSX in my taxable account. lol @ bolded. love you hawk mildly outdated but pretty good link that I hadn't read before. generally agreed and pretend I added a reference to the vanguard TDF taxable account debacle from the other year (which could apply to other mutual funds-of-funds in the future, too, or other weird cap gains situations for MFs not using the ETF link trick)
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Apr 21, 2023 21:49
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H110Hawk posted:pmchem is bullying me in the US Tax thread saying I shouldn't have Mutual Funds in my taxable brokerage, but I could have ETFs, but I don't know why. Why one over the other? I'm 100% at fidelity with a blend of FSKAX and FSPSX in my taxable account. Mutual funds can be less tax efficient than similar ETFs, but looking at FSKAX for example, they haven't had a capital gains distribution since 2019 and it was pretty small. Also keep in mind you are always going to have to pay taxes on capital gains, you just may be able to delay that with ETFs (delaying taxes is good, but it is not reducing or eliminating the tax). Also, I'm pretty sure Vanguard's patent that let them have ETF style tax treatment on mutual funds has expired. Not sure if anyone else is using that model though.
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Apr 21, 2023 21:52
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Can a mutual fund in a taxable account trigger a tax bill without actually sending you any cash? Or is it just like dividends where it's only when you actually get paid out, and all the sad stories from the great vanguard debacle are people who just thought they got a big cash payment and didn't realize there'd be taxes on it? If it's the former I absolutely understand the anger. If it's the latter that sucks but also kinda something everyone should be paying attention to in taxable accounts. If anything, brokers should be mandated to do more customer education about estimated tax payment obligations.
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Apr 21, 2023 22:31
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