dumping FA

[wallygator69]

Hi Folks,

Thanks for the help so far....

You have convinced me to pull the trigger and officially dump my FA. Turns out I have a bunch of 3 star funds a couple of 2 and even a 1 star fund.

Problem is I have been in B shares for about 3-4 years. They convert to A shares in 5-6 years..

I have essentially $200k in not so good bond funds and $100k in not so good mutual funds.

If I sell them all the capital gain is about $15k. I can off set this already with Carryover losses...

Concern is I will probably take a 2% to 3% penalty for early withdrawl.

I am rationalizing that it makes sense to take the hit since at Vanguard I can get 1% lower expense ratio. Since they are mostly 3 star funds or less I should be able to find comparable funds with better performance at VG.

Am I missing anything in my reasoning?

Also I have 6 Funds that have been exremely good and are rated 4 or 5 star. The are the likes of Calamos, Oppenheimer, American Funds etc. Generalization here, but can these types of funds go smoothly into vanguard and be sold off without penalties? (I assume there will be transaction fees?)

Also, If I transfer the entire account to VG will I run into problems tracking (making sure) the B shares become A shares or does that info transfer with my shares?

Thanks again for the help.

Wally

 

[cute fuzzy bunny]

Sounds like a one year hit, then better investing after that.

This should also serve as a warning to people thinking about turning over their financial lives. Be careful you dont end up in expensive underperformers with a financial hurdle that has to be jumped before you can leave.

 

[SteveR]

Sounds like a one year hit, then better investing after that.

This should also serve as a warning to people thinking about turning over their financial lives.  Be careful you dont end up in expensive underperformers with a financial hurdle that has to be jumped before you can leave.

I hear ya on that one!

My after tax portfolio started out as a "learning" experience...sort of like training wheels to learn about investing. The trouble is I have a few stocks I picked that had a nice run up in the late '90s that have a basis of under a $ now. To sell them off would be a nasty tax hit so these may lie around until I croak so my kids can get a new basis at current market value. The trick is to die before the company does.

Actually, once I finally ER for good my income will be much lower and the tax hit will be much less then. It is sort of like being stuck between a rock and a hard place. The stocks have been moving sideways (some actually down) so I am losing on paper but as long as I don't sell I have not lost anything and I pay no taxes. They also don't increase in value much so which is worse... a huge tax bill now and a future gain on what is left or do nothing and lose equity but not real cash?

 

[wallygator69]

My after tax portfolio started out as a "learning" experience...sort of like training wheels to learn about investing. The trouble is I have a few stocks I picked that had a nice run up in the late '90s that have a basis of under a $ now. To sell them off would be a nasty tax hit so these may lie around until I croak so my kids can get a new basis at current market value. The trick is to die before the company does.



I am confused. You bought stock in the 90's presumably more than $1.00 a share. How is the cost basis now less than $1.00?

If you bought 100 shares of X for $10.00 a share (your cost basis). You invested $1000.00.

If it is now valued at $1.00 per share, you have a long term Capital loss of $900.00.

Am i missing something?

W

 

[SteveR]

I am confused.  You bought stock in the 90's presumably more than $1.00 a share. How is the cost basis now less than $1.00?

If you bought 100 shares of X for $10.00 a share (your cost basis).  You invested $1000.00. 

If it is now valued at $1.00 per share, you have a long term Capital loss of $900.00.

Am i missing something?

W

I held you post up to the light so I could see it and decoded it for the others to see.

The answer is stock splits. Basis goes down when the stock splits. I have one company that split 5 times already that will half the original cost each time that happens while it doubles the number of shares.
(hint: DELL)

By basis is $0.54 per share.

 

[cute fuzzy bunny]

I had to put lemon juice on it and hold it to a light bulb...

 

[wallygator69]

How do you get the pretty little box around the post so folks know what you are replying to.... I thought changing the color would be helpful, since cutting and pasting didn't do it?


I stink!

Hour and a half liquid lunch may have helped, I think I did it once before.

One plus of a few beverages is that I think I convinced myself that this Anal Glaucoma is not going to go away.

T/W

 

[renferme]

How do you get the pretty little box around the post so folks know what you are replying to.... I thought changing the color would be helpful, since cutting and pasting didn't do it?


I stink!

Hour and a half liquid lunch may have helped, I think I did it once before.

One plus of a few beverages is that I think I convinced myself that this Anal Glaucoma is not going to go away.

T/W

Walleygator: click on "quote" in the upper right corner of the post that you are replying to, self explanatory after that.

 

[wallygator69]

Walleygator:   click on "quote" in the upper right corner of the post that you are replying to,   self explanatory after that.

Brilliant! Me so Smart

Thanks

 

[Nords]

Am I the only one who thinks that some of these avatars need to have their graphics considerably enlarged for closer appraisal?

Wally, do you have a link to that?

 

[cute fuzzy bunny]

Woman. Big bazoombas. Golf clubs. Golf. Theres a joke in here somewhere.

Someone put in a call to "Bob"....

 

[Nords]

Someone put in a call to "Bob"....

Oh, Bob's working on it with Al's stuffed beaver, but he has to whip out his big... er... magnifying glass.

No, I won't tell you whether that's Bob or the beaver!

 

[cute fuzzy bunny]

I hope the beavers not that big.

 

[getoutearly]

Hi Folks,

Thanks for the help so far....

You have convinced me to pull the trigger and officially dump my FA. Turns out I have a bunch of 3 star funds a couple of 2 and even a 1 star fund.

Problem is I have been in B shares for about 3-4 years.  They convert to A shares in 5-6 years..

I have essentially $200k in not so good bond funds and $100k in not so good mutual funds.

If I sell them all the capital gain is about $15k. I can off set this already with Carryover losses...

Concern is I will probably take a 2% to 3% penalty for early withdrawl.

I am rationalizing that it makes sense to take the hit since at Vanguard I can get 1% lower expense ratio. Since they are mostly 3 star funds or less I should be able to find comparable funds with better performance at VG.

Am I missing anything in my reasoning?

Also I have 6 Funds that have been exremely good and are rated 4 or 5 star. The are the likes of Calamos, Oppenheimer, American Funds etc.  Generalization here, but can these types of funds go smoothly into vanguard and be sold off without penalties? (I assume there will be transaction fees?)

Also, If I transfer the entire account to VG will I run into problems tracking (making sure) the B shares become A shares or does that info transfer with my shares?

Thanks again for the help.

Wally

I can relate.  Am in a similar boat with my FA.  I went in to check out the performance and see how much I would have to pay in taxes to liquidate. I didn't realize that many of the funds I was in were actually Front End Loads.  Jees, what an idiot I am.....

 

[ERD50]

I didn't realize that many of the funds I was in were actually Front End Loads.

Well, the 'good' news is, once you pay the front end load, the damage is done - history. No reason not to move them out if you can find better investments elsewhere.

Those dang back-end loads are the killer, that can keep you trapped - but often, if you compare the expense ratios to an index or ETF, you might be better of just taking the hit and moving them.

-ERD50

 

[wallygator69]

Am I the only one who thinks that some of these avatars need to have their graphics considerably enlarged for closer appraisal?

Wally, do you have a link to that?

Sorry, I don't but I can email it to you if you would like. My email is pteksales@aol.com. Put Wallygator in the subject so I don't think it's spam.

W