Anonymous wrote:in general. In taxable accounts you will pay capital gains which 15%-20% typically.

Capital gains taxes are effectively higher than this if you are subject to the AMT and you are at the point on the AMT where you deduction is phasing out. Every dollar gained in capital gains is treated as additional income from the AMT as your deductions phase out. Therefore, any capital gains leads to a faster phase-out of your deduction and what is essentially an additional tax on the capital gains from the deduction phase out. Qualified dividends have the same effect on your AMT tax.

I was a math major in college and it took me hours of playing with Turbo Tax and reading documents on the Internet last year to understand why our tax rate on capital gains and qualified dividends was so high. I'm one of those (apparently) rare people who think that my husband and I are fortunate to earn approximately $300,000 between us (split fairly evenly) and we should pay significant taxes, but I do not like the fact that our current tax system is so complicated. We should all be able to understand what effect a financial action will have on our taxes and right now that is almost impossible for most people.

in general. One comment about taxes that 22:14 brings up. If you are in 401k or IRA then there is no tax incurred when you sell (also if you have a loss there is no tax loss to record). So there you can swap out funds quite painlessly.
In taxable accounts you will pay capital gains which 15%-20% typically.

I have switched to ETFs away from managed mutual funds. Very happy. But they had fees around 1%. Vanguard index funds have very low fees.

ETFs are different in mutual funds in the spread. So if you do go with ETF you need to look at the spread (buy-sell). On larger ETFs I don't think this is an issue.

I agree. I have the Vanguard Index Admiral Fund which has an expense ration of about .05% which is lower than most ETF expense ratios. So that is why we are sticking with it.

Anonymous wrote:Yes. Just leave them. Also, if you sell your mutual funds that you have owned for a long time you will owe taxes on them. Selling them all at once could put you in a higher tax bracket for the year.

Oh my gosh. Didn't even think of that. DW would have flipped. Thanks!

Yes leave them. The product was designed in part to attract buy and holders into a more frequent trading style.

Yes. Just leave them. Also, if you sell your mutual funds that you have owned for a long time you will owe taxes on them. Selling them all at once could put you in a higher tax bracket for the year.

Thanks, I was literally wondering about this thing this very day...

Yes, it is fine.

Yeah, just leave it.

I've had a few Vanguard index mutual funds for decades, buy and hold, low fees (0.07% to 0.2%). In older age, I've started selling small amounts over time.

I read about ETFs but the Vanguard rep tells me there's no significant advantage to switch my index funds to them. I don't care that mutual funds are priced just once per day -- I'm not about to try to time an ETF day trade. In terms of fees/commissions on each, they say my expenses would be about the same. Does this all make sense?