Hi! My parents bought me 2 mutual funds (CFLGX and MRGAX) when I was young. I've recently been learning more about investing and based on research that I've done, these 2 mutual funds seem less than ideal for someone my age (early 30s). CFLGX is a dividend fund and has an insane ER (1.41%). MRGAX also has a very high ER (0.88%). Was wondering if the best option here would be to sell these and just get taxed on LTCG so I could use the money to invest in something better like an SP500 ETF instead? Any other routes I could take to avoid LTCG tax? These are in a taxable brokerage account. Thanks!
Sell poorly performing Mutual Funds?
byu/k_jeffrey inpersonalfinance
Posted by k_jeffrey
4 Comments
Are they held in a tax-advantaged account (IRA, 529 etc) or a regular brokerage?
Do you have other sales that you could tax loss harvest?
If not, then you’d just have to pay the tax and move on.
What are the gains? Hard to give advice without knowing what amount we’re talking about.
But yeah, those funds suck.
Dump them and go with VTI/VXUS (not sp500)
Unless you have other things you could sell at a loss to wipe out the gains, you’re just going to have to pony up for the LTCG.
I would by VT with the remaining proceeds. Maximum stock diversification with minimum effort.
I’m in a similar situation. You could donate the shares, pay no LTCG, and deduct the almost the entire donated value (OBBB changes donation deductions slightly). This only helps if you were planning to do a cash donation this year anyway and were going to itemize.
Keep in mind that depending on the gains and your income, you could owe NIIT or even state-specific capital gains taxes. It may be worth splitting the sale over multiple tax years.