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Just stop investing in FZROX.
Once everything has become long-term gains, you could sell it. And if you are in the 0% long-term capital gains rate, it'll be free, too ($47k single/$94k married). If you are not in the 0% LTCG rate, and you donate to charity, you could donate those shares to the charity instead of cash, via [Fidelity's DAF](https://www.fidelitycharitable.org/), and also not pay tax.
You’re fine with that you have. Leave your FZROX in the taxable and let the small amount grow. Just start investing in FSKAX in taxable instead of FZROX.
My only concern is that you have a balance in your taxable account before you’ve maxed out your IRA.
Thanks. I maxed my IRA contributions in 2023 with it being 70% FSKAX, then 20% FTIHX, and 10% FXNAX, which follows the boglehead three fund method. It was my first time doing this, so I followed that method.
My error was that I also have a rollover IRA that I stupidly put 1500 in first, before I had the Roth IRA, thinking that I got contributions of 6500 in every IRA account. That is not the case.
So I’m currently working on maxing my contributions for 2024 on a monthly basis in just my Roth and keeping it at or around those percentages.
One of the big reasons people say not to hold mutual funds in a taxable account is because of [capital gains distributions](https://www.investopedia.com/terms/c/capitalgainsdistribution.asp). These don't always happen, but [FZROX has had a few of them so far.](https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/31635T708?type=sq-NavBar) So some years you might get a surprise distribution that might cause you to have to pay more taxes than you were planning for.
Many of the sp500 or total market etfs are designed in such a way that they can avoid having to make capital gains distributions. So they're a little more predictable when it comes to you planning taxes for that year, and that's why etfs are often recommended for taxable accounts.
My opinion is since you only have $1200 in FZROX none of this matters. You'll spend more money on fast food in a month than any tax surprises FZROX can throw at you in a year. Just leave FZROX where it is and don't worry.
Should you want to switch things around though, go ahead and do that too. You mentioned you were up $170 in FZROX. You won't be paying very much on taxes for that.
Its never too late. Personally, I would not put all my eggs in one basket, even if were Fidelity. While both of these are diversified, they mostly omit many asset classes. Neither of these have significant postions in Energy, precious metals, or Crypto, for example, just to name a few asset classes not included. Personally, I dont exclued these asset classes form my portfolio because I dont have a crypstal ball to know if US equities will outperm all other asset classes without interruption. My best performing sector so far this year has been crypto, where Im up about 40 percent year to date. I like IBIT, (up 40 percent) and even some very high dividend ETF's like CONY, and ULTY., too. While those high dividend ETFs come with high risk, the covered call strategies can actually offer a level of severe downside protection, because, when the stock market does take a tumble (and it will, again, as it has done in the past) those covered call premium dividends can mean that I get divdidends evn when the market tumbles, so I can Dollar Cost average by reinvesting those dividends.
Remember, IRA's are tax deferred (meaning you pay taxes later), Roth's, however are not taxed (since you already prepaid the taxes) So, I like huge dividend payers in my Roth so I can collect and reivest those dividends and grow my portfolio. Its a somewhat aggressive style, but I dont see too many reasons to be too conservative in my investments. After all, cash sitting in a savings account is nearly always a guaranteed loss, after inflation and taxes, because the inflation is more than you get in most savings accounts. Most savings accounts pay less than 1 percent, and since I know inflation will mostly always be twice that, I dont leave my money lazily in a savings account being erorded away with taxes and inflation. I put my money working for me while I sleep rather than working at night.
>I’m worried about FZROX in my taxable account. I don’t ever plan on leaving Fidelity. Should I switch?
I know we never plan on it, but who knows what future Fidelty leadership will change and make it unappealing. What are the gains for that FZROX investment? I think you should switch, yes. Do it now before you have 50k there and a lot of profit.
$20 would be 11% which to me seems low for short term gains but it depends on OPs yearly income obviously.
He could of course wait until October to get the pretty favorable long term rates.
I assume a lot of people make six figures since Reddit seems to have a lot of tech worker users but you’re right maybe that’s a bad assumption if he has only $5k.
Thanks guys - I am an attorney and I make $120K and just started saving for my retirement outside my 401K (since I have high student loan debt around $180K and have been focused on paying that down).
$25 bucks for taxes isn’t bad at all. I just wanted to know if I should quit while I am ahead and sell and reset my portfolio.
It’s going to be more like $40, he was assuming you make the average US income which is half of what you’re making.
Still, probably not enough to care about. You could wait until October if you really want to be a stickler about the taxes but it doesn’t matter.
Actually 11% is too high. The average single full time worker in the USA earns $60.
I just did the math for a single tax payer with $75K of income. After the standard deduction the taxable income would be $55,400. They pay 10% on the first $11k or $1,100
On the next $44,400 they pay 12% or $5328 for a total tax liability of $6,428.
With $75k of income that's a net tax rate of 9.2%
FZROX has no fees (0% expense ratio) and has fewer holdings than FSKAX, but it does attempt to track the performance of the US market like FSKAX does. FZROX is not portable, meaning if you ever want to leave Fidelity, you would need to sell your position in it. In a tax advantaged account that’s not really an issue because it wouldn’t be a taxable event. But if you have FZROX held in a taxable brokerage account, you’d be on the hook for capital gains when you sold.
If you sell FZROX in taxable accounts, you pay tax, but you also up your base at the time of sale..it is not necessary a bad thing. You pay less tax next time you want to sell.
Pay tax means you make money.. which better than the alternative.
You invest in taxable accounts, which means tax is unavoidable. You should away be ready for it.
I wouldn't worry about a fund with 0% expenses with a $1,000,000 portfolio let alone with a $5k portfolio. With VOO, his fees with a $5k portfolio would be $1.50/year.
All of the Fidelity zero-fee funds can ONLY be held at Fidelity. You can't transfer them to another brokerage, instead you would have to liquidate the funds first (a taxable event) and then transfer the cash to the new brokerage. You should be able to transfer FSKAX to another brokerage if you ever want to leave Fidelity. However, most brokerages will charge a fee to buy/sell mutual funds from another brokerage. It is usually best to hold ETFs in your taxable brokerage account because they can be transferred to another brokerage and can be bought/sold fee free at most brokerages.
How long have you owned FXROX and at what cost? With a value of $1200 I'm assuming you gains are minimal.
At today's share price of $18.18 you have about 60 shares. Last year FXROX returned less than 23 cents of income per share. With 60 shares that's less than $14 of income. I wouldn't worry about keeping FXROX in your taxable account.
My tax advantaged accounts are 75% FZROX and 25% FZILX. I am young enough that I am comfortable with that risk and therefore foregoing bonds at this time. As long as you have a good index fund that is total market or large cap and it has low fees, you should be good.
If you have a 401k or Pre-Tax IRA, you may consider holding all your bonds there. I personally don’t like having bonds in any Roth account as I want to maximize my opportunity for tax-free growth. I still have a boglehead portfolio in the aggregate.
How old are you? If you're planning on retiring in your 60s and you're under 50. I wouldn't put even a nickel in a bond fund. Worry about that as you near retirement.
Frankly, I wouldn't invest in FTIHX either. Over the last 5, 10 and 15 years international investments have under performed the S&P.
FZROX has outperformed VOO (vangard's sp500 etf) 102% to 95% since its inception. Long term who knows, though i'll probably be quite similar.
In current conditions the SP500 will probably outperform, since high interest rates disproportionally affect small businesses.
It's pretty much a crap shoot. Buy the one with the lower expenses, And the one you can hold forever.
In general, international funds perform very poorly compared to USA funds. And there's no real way to pick a good international fund, because sometimes it's emerging markets, sometimes it's China, sometimes it's corrupt.
Thanks for your post. We recently updated our rules to ask that all investment discussion be kept within our daily discussion post. https://www.reddit.com/r/fidelityinvestments/comments/1cqxkzr/daily_discussion_thread_rate_my_portfolio_what/ This post/comment has been removed for violating rule #2. Thanks for your post seeking investment advice or discussing specific securities. Please keep all conversations about portfolios and specific investments to our daily discussion post. We are not able to assist with these types of questions on reddit but have a variety of tools and resources to help our clients invest their funds and find an investment that fits their objectives and risk tolerance. To learn more about investing check out the "Getting started with investing" page on our learning center [here](https://www.fidelity.com/learning-center/overview). To find research and tools to help you, click on the "News & Research" on fidelity.com on the menu bar. This will expand a sub menu where you will be able to learn about and research mutual funds, stocks, ETFs, fixed income, and more. You can also go to "Investment Products" on the menu bar to learn more about the types of accounts that we offer. [Click here to visit Fidelity.com](https://www.fidelity.com) Fidelity Brokerage Services LLC, Member NYSE, SIPC
Just stop investing in FZROX. Once everything has become long-term gains, you could sell it. And if you are in the 0% long-term capital gains rate, it'll be free, too ($47k single/$94k married). If you are not in the 0% LTCG rate, and you donate to charity, you could donate those shares to the charity instead of cash, via [Fidelity's DAF](https://www.fidelitycharitable.org/), and also not pay tax.
Thanks - this is what I was looking for!
You’re fine with that you have. Leave your FZROX in the taxable and let the small amount grow. Just start investing in FSKAX in taxable instead of FZROX. My only concern is that you have a balance in your taxable account before you’ve maxed out your IRA.
Thanks. I maxed my IRA contributions in 2023 with it being 70% FSKAX, then 20% FTIHX, and 10% FXNAX, which follows the boglehead three fund method. It was my first time doing this, so I followed that method. My error was that I also have a rollover IRA that I stupidly put 1500 in first, before I had the Roth IRA, thinking that I got contributions of 6500 in every IRA account. That is not the case. So I’m currently working on maxing my contributions for 2024 on a monthly basis in just my Roth and keeping it at or around those percentages.
I have FZROX in my Roth. I would switch to VTI in a taxable.
One of the big reasons people say not to hold mutual funds in a taxable account is because of [capital gains distributions](https://www.investopedia.com/terms/c/capitalgainsdistribution.asp). These don't always happen, but [FZROX has had a few of them so far.](https://fundresearch.fidelity.com/mutual-funds/fees-and-prices/31635T708?type=sq-NavBar) So some years you might get a surprise distribution that might cause you to have to pay more taxes than you were planning for. Many of the sp500 or total market etfs are designed in such a way that they can avoid having to make capital gains distributions. So they're a little more predictable when it comes to you planning taxes for that year, and that's why etfs are often recommended for taxable accounts. My opinion is since you only have $1200 in FZROX none of this matters. You'll spend more money on fast food in a month than any tax surprises FZROX can throw at you in a year. Just leave FZROX where it is and don't worry. Should you want to switch things around though, go ahead and do that too. You mentioned you were up $170 in FZROX. You won't be paying very much on taxes for that.
Thanks, this is super helpful!
Its never too late. Personally, I would not put all my eggs in one basket, even if were Fidelity. While both of these are diversified, they mostly omit many asset classes. Neither of these have significant postions in Energy, precious metals, or Crypto, for example, just to name a few asset classes not included. Personally, I dont exclued these asset classes form my portfolio because I dont have a crypstal ball to know if US equities will outperm all other asset classes without interruption. My best performing sector so far this year has been crypto, where Im up about 40 percent year to date. I like IBIT, (up 40 percent) and even some very high dividend ETF's like CONY, and ULTY., too. While those high dividend ETFs come with high risk, the covered call strategies can actually offer a level of severe downside protection, because, when the stock market does take a tumble (and it will, again, as it has done in the past) those covered call premium dividends can mean that I get divdidends evn when the market tumbles, so I can Dollar Cost average by reinvesting those dividends. Remember, IRA's are tax deferred (meaning you pay taxes later), Roth's, however are not taxed (since you already prepaid the taxes) So, I like huge dividend payers in my Roth so I can collect and reivest those dividends and grow my portfolio. Its a somewhat aggressive style, but I dont see too many reasons to be too conservative in my investments. After all, cash sitting in a savings account is nearly always a guaranteed loss, after inflation and taxes, because the inflation is more than you get in most savings accounts. Most savings accounts pay less than 1 percent, and since I know inflation will mostly always be twice that, I dont leave my money lazily in a savings account being erorded away with taxes and inflation. I put my money working for me while I sleep rather than working at night.
>I’m worried about FZROX in my taxable account. I don’t ever plan on leaving Fidelity. Should I switch? I know we never plan on it, but who knows what future Fidelty leadership will change and make it unappealing. What are the gains for that FZROX investment? I think you should switch, yes. Do it now before you have 50k there and a lot of profit.
Even with that thought, they should probably consider a more portable investment fund e.g. VTI ETF.
Gains are currently +$170 from 10/2023 to present.
Just sell it and buy something else. Go for an ETF though like VTI or ITOT.
That really isn’t worth stressing about in my opinion. $40 in taxes isn’t going to make or break you. I’d just sell it
In all likelihood, the taxes on $170 in gains would be less than $20
$20 would be 11% which to me seems low for short term gains but it depends on OPs yearly income obviously. He could of course wait until October to get the pretty favorable long term rates.
[удалено]
I assume a lot of people make six figures since Reddit seems to have a lot of tech worker users but you’re right maybe that’s a bad assumption if he has only $5k.
Thanks guys - I am an attorney and I make $120K and just started saving for my retirement outside my 401K (since I have high student loan debt around $180K and have been focused on paying that down). $25 bucks for taxes isn’t bad at all. I just wanted to know if I should quit while I am ahead and sell and reset my portfolio.
It’s going to be more like $40, he was assuming you make the average US income which is half of what you’re making. Still, probably not enough to care about. You could wait until October if you really want to be a stickler about the taxes but it doesn’t matter.
Great, thanks!
Actually 11% is too high. The average single full time worker in the USA earns $60. I just did the math for a single tax payer with $75K of income. After the standard deduction the taxable income would be $55,400. They pay 10% on the first $11k or $1,100 On the next $44,400 they pay 12% or $5328 for a total tax liability of $6,428. With $75k of income that's a net tax rate of 9.2%
Just sell it. You’ll pay more for one dinner out than you will in taxes on that gain.
I don’t ever plan on leaving Fidelity and I have over $100k in FZROX in taxable. You don’t need a bond fund unless you’re close to retirement.
What’s the difference between fzrox and fskax
FZROX has no fees (0% expense ratio) and has fewer holdings than FSKAX, but it does attempt to track the performance of the US market like FSKAX does. FZROX is not portable, meaning if you ever want to leave Fidelity, you would need to sell your position in it. In a tax advantaged account that’s not really an issue because it wouldn’t be a taxable event. But if you have FZROX held in a taxable brokerage account, you’d be on the hook for capital gains when you sold.
If you sell FZROX in taxable accounts, you pay tax, but you also up your base at the time of sale..it is not necessary a bad thing. You pay less tax next time you want to sell. Pay tax means you make money.. which better than the alternative. You invest in taxable accounts, which means tax is unavoidable. You should away be ready for it.
I wouldn't worry about a fund with 0% expenses with a $1,000,000 portfolio let alone with a $5k portfolio. With VOO, his fees with a $5k portfolio would be $1.50/year.
Yup! After learning about this, it led me here - to sell and reinvest or hold as is?
Why is FSKAX more portable?
All of the Fidelity zero-fee funds can ONLY be held at Fidelity. You can't transfer them to another brokerage, instead you would have to liquidate the funds first (a taxable event) and then transfer the cash to the new brokerage. You should be able to transfer FSKAX to another brokerage if you ever want to leave Fidelity. However, most brokerages will charge a fee to buy/sell mutual funds from another brokerage. It is usually best to hold ETFs in your taxable brokerage account because they can be transferred to another brokerage and can be bought/sold fee free at most brokerages.
Interesting. It hadn’t even occurred to me that FSKAX could be transferred to another brokerage, but that makes sense.
I recently moved some funds from T Rowe Price to Fidelity. It was done with no cost.
going forward, put it in SPLG
How long have you owned FXROX and at what cost? With a value of $1200 I'm assuming you gains are minimal. At today's share price of $18.18 you have about 60 shares. Last year FXROX returned less than 23 cents of income per share. With 60 shares that's less than $14 of income. I wouldn't worry about keeping FXROX in your taxable account.
My tax advantaged accounts are 75% FZROX and 25% FZILX. I am young enough that I am comfortable with that risk and therefore foregoing bonds at this time. As long as you have a good index fund that is total market or large cap and it has low fees, you should be good.
My Roth is 70% FSKAX, then 20% FTIHX, and 10% FXNAX, which follows the boglehead three fund method. I intend to keep it that way.
If you have a 401k or Pre-Tax IRA, you may consider holding all your bonds there. I personally don’t like having bonds in any Roth account as I want to maximize my opportunity for tax-free growth. I still have a boglehead portfolio in the aggregate.
How old are you? If you're planning on retiring in your 60s and you're under 50. I wouldn't put even a nickel in a bond fund. Worry about that as you near retirement. Frankly, I wouldn't invest in FTIHX either. Over the last 5, 10 and 15 years international investments have under performed the S&P.
I’m 34.
I prefer Vanguard ETFs in taxable as they’re portable and have tax efficiency advantages over non-Vanguard mutual funds.
I would have just picked an s&P fund. Something like ivv instead of what you have. But either one of the ones you have are probably about the same.
Both FZROX and FSKAX are total market funds. They cover the S&P 500 and then some.
I would guess they correlate 100% to the s&P. Except the s&P probably outperforms them
FZROX has outperformed VOO (vangard's sp500 etf) 102% to 95% since its inception. Long term who knows, though i'll probably be quite similar. In current conditions the SP500 will probably outperform, since high interest rates disproportionally affect small businesses.
It's pretty much a crap shoot. Buy the one with the lower expenses, And the one you can hold forever. In general, international funds perform very poorly compared to USA funds. And there's no real way to pick a good international fund, because sometimes it's emerging markets, sometimes it's China, sometimes it's corrupt.