Move money from Total Market Index to S&P 500 Index?

[lsimpson33]

Question: How do I figure out if it's worth it to sell my total stock market index fund shares and move them to a S&P 500 index fund (which has higher returns, even with fees)?

When I set-up my investment strategy, I set it up around a total stock market index fund (FZROX) vs. an S&P 500 index fund (FXAIX). I thought the fees would make FZROX a better option, but in reality I should have chosen the FXAIX. Whoops. Not a terrible whoops, but a whoops.

Between October 2018 and February 2019, I did a series of lump sum investments into FZROX. After that, I've done monthly investments into it. These monthly investments probably average around $6,400.

Current cost basis: 171,072.27
Current value: 218,532.41
Capital gains tax bracket: 15%
Income tax bracket: 24%
Years to FIRE: 9

 

[jimbee]

I would choose a total stock market index fund over a S&P 500 fund, due to more diversification.

 

[audreyh1]

The total stock market fund is more diversified. Just because S&P 500 fund, which is concentrated in large cap companies, outperformed it during a time period doesn’t mean that it will in the near future. I think you should leave it alone and not chase minor performance differences.

 

[easysurfer]

When total market fund was new, I moved from SP 500 to total for the extra diversification.

 

[Palmtree]

Same here. I moved from the S&P500 to Total Stock funds a few years ago. They are so close in the majority of what they hold, it's almost a wash. Stay in Total and relax.

 

[Chuckanut]

Diversification- Don't Invest Without It.

Yea, I agree, stay in the total market. IIRC, the total market funds are still mostly invested in the 500.

You haven't been invested very long. Things change, sometimes at the drop of a hat. Any hat.

 

[OldShooter]

An S&P 500 is a sector fund, investing in large cap US stocks. Recently that sector has been slightly stronger than the total US market and, in fact, stronger than the non-US international market.

Sectors come and go in popularity. If you are not familiar with the "quilt chart" I suggest that you study it and then decide for yourself whether you can predict which sectors will be future winners. (Hint: There is probably no one who can do that.) https://www.callan.com/periodic-table/

I would not make the change you're suggesting. I would, however, suggest that you consider adding international stocks to your portfolio. This sector comprises about 45% of the world's investable stocks. Here is a very short video by one of the academic experts on investing: https://famafrench.dimensional.com/videos/home-bias.aspx
Also, here is Vanguard's take: "Global equity investing:The benefits of diversification and sizing your allocation" https://www.vanguard.com/pdf/ISGGEB.pdf

There is no "whoops" in your portfolio unless you consider your inability to precisesly predict the future to be a "whoops." Also, two years of investing history is not enough to assess a strategy. Ten years is closer to the mark, though some impatient people might be satisfied with five.

For reference, our money is invested worldwide via VTWAX.

 

[foxfirev5]

Cover all the bases. Stay with the total stock market fund. Simple.

 

[pb4uski]

Like others have posted, FZROX is more diversified... if it were me, I would stick with FZROX.

For the 2-year period, FZROX has outperformed FXIAX. But FZROX is not very old... if you compare FXIAX to FSKAX... from Oct 2011 to Aug 2020 FXIAX returned 15.88% vs 15.59% for FSKAX... a virtual tie.

https://www.portfoliovisualizer.com...cation2_2=100&symbol3=FSKAX&allocation3_3=100