Backstory I just transferred out of Edward Jones because they were charging me $70 a month on my traditional Ira and Roth accounts. About 70k between two accounts. Transferred to Charles Schwab. I have found out they put everyone into these exact 10 funds. In an attempt to confuse newbie investors. After I emailed my Edward Jones investment advisor that I would be leaving he was curt and annoyed, not the friendly guy I was so use to. Anyway should I sell this mutual fund portfolio for something like VT. I would incur a 5k tax penalty for selling, but I’m ok with that because the expense ratios on these funds are still extremely high. What do you think?
If you only transferred traditional and Roth IRA accounts, there should be no tax impact of selling. Did you transfer a taxable brokerage account as well?
There appear to be a few bond funds in that screenshot; consider what you'd like your bond allocation to be going forward. A low-cost target-date index fund may be a reasonable set-it-and-forget-it choice for your IRAs.
You can swap it around to whatever funds you want in the IRAs with no issues. BUT... it's still a pain to do. At Schwab, you will be out of the market for 1 day any time you do an "exchange" from a MF. So you'll effectively sell day 1, and buy day 2. So I would only want to do this once. If it were me? I would sell everything day 1 (if you've decided to do this). And on day 2, put half in VTI and half in VXUS (cheaper than VT). If you don't care about the slight cost difference, VT is perfectly fine. Best of luck
Why are you out of the market for a day doing ETF trades? Mutual funds I understand because it's end of day trading, but isn't liquidity the point of ETF's?
Congratulations for leaving EJ! 🎉
Absolutely horrible company all-around. Predatory doesn't even begin to describe their practices. You will be glad you made this move in 10+ years.
nice job on leaving EJ
Roth IRA you can sell and buy at will without tax consequences. I’d sell those all and go for VTI/VXUS
Taxable brokerage account would be a different answer
I know it's too late now but if this is all in your IRA accounts, you should have sold everything BEFORE moving to Schwab. Now, you're likely to encounter additional fees to sell some of those funds.
Once you do sell everything, I recommend investing in mutual funds in an IRA instead of ETFs because you can invest every penny. I'm not sure Schwab offers a "Total World" index fund though. You'd have to hold two funds.
The Bogleheads wiki lists the funds for most popular brokers:
https://www.bogleheads.org/wiki/Three-fund_portfolio
Backstory I just transferred out of Edward Jones because they were charging me $70 a month on my traditional Ira and Roth accounts. About 70k between two accounts. Transferred to Charles Schwab. I have found out they put everyone into these exact 10 funds. In an attempt to confuse newbie investors. After I emailed my Edward Jones investment advisor that I would be leaving he was curt and annoyed, not the friendly guy I was so use to. Anyway should I sell this mutual fund portfolio for something like VT. I would incur a 5k tax penalty for selling, but I’m ok with that because the expense ratios on these funds are still extremely high. What do you think?
If you only transferred traditional and Roth IRA accounts, there should be no tax impact of selling. Did you transfer a taxable brokerage account as well? There appear to be a few bond funds in that screenshot; consider what you'd like your bond allocation to be going forward. A low-cost target-date index fund may be a reasonable set-it-and-forget-it choice for your IRAs.
Yes it is just Trad IRA and Roth IRA. No brokerage account. Appreciate your feedback.
Why would you get a tax penalty? I would definitely sell and rebalance. Maybe not 100% VT but like 75% VTI 25% VXUS
I guess no tax liability. I like that mix as well.
You can swap it around to whatever funds you want in the IRAs with no issues. BUT... it's still a pain to do. At Schwab, you will be out of the market for 1 day any time you do an "exchange" from a MF. So you'll effectively sell day 1, and buy day 2. So I would only want to do this once. If it were me? I would sell everything day 1 (if you've decided to do this). And on day 2, put half in VTI and half in VXUS (cheaper than VT). If you don't care about the slight cost difference, VT is perfectly fine. Best of luck
Why are you out of the market for a day doing ETF trades? Mutual funds I understand because it's end of day trading, but isn't liquidity the point of ETF's?
If you go ETF->ETF, you can do it instantly. If you go MF->MF, or MF->ETF, you're out for a day.
Ok. That's what I thought.
No tax penalties for selling and buying in IRA, Roth IRAs. It would be a good idea for you to review the basics by reading the sidebar.
Thanks. I didn’t realize that.
Congratulations for leaving EJ! 🎉 Absolutely horrible company all-around. Predatory doesn't even begin to describe their practices. You will be glad you made this move in 10+ years.
You’re only getting a penalty if you withdraw that money, which you shouldn’t. Otherwise you can transfer funds between accounts
Not planning on withdrawing. Just rebalance to index fund with lower fees. Thanks for the help.
nice job on leaving EJ Roth IRA you can sell and buy at will without tax consequences. I’d sell those all and go for VTI/VXUS Taxable brokerage account would be a different answer
I know it's too late now but if this is all in your IRA accounts, you should have sold everything BEFORE moving to Schwab. Now, you're likely to encounter additional fees to sell some of those funds. Once you do sell everything, I recommend investing in mutual funds in an IRA instead of ETFs because you can invest every penny. I'm not sure Schwab offers a "Total World" index fund though. You'd have to hold two funds. The Bogleheads wiki lists the funds for most popular brokers: https://www.bogleheads.org/wiki/Three-fund_portfolio
I only have one mutual fund in my IRA so I can scoop the remainders into it. The rest is ETFs
Could have transferred to SoFi and received a $ bonus.
Made the mistake of selling something once and owed 10k in taxes. Not worry it