r/investing
Moving out of mutual funds sanity check
Seeking advice on moving $240k from conservative mutual funds to Fidelity to DCA into FXAIX and FDEWX after maxing retirement accounts.
- Transitioning from conservative mutual funds to low-cost index funds will better put the money to work for long-term growth.
- Systematic DCA into broad market index and target-date funds provides a disciplined approach to wealth building.
- Selling the existing mutual funds will trigger long-term capital gains taxes, creating a short-term friction cost of around $3k.
My girlfriend (37) has $240k in proprietary mutual funds through Principal. They’re very conservative and she wants to put that money to work.
Here’s our plan: Sell all the mutual funds, transfer that cash to a brokerage account with Fidelity, start maxing her employer 401k for 3 years and use the fidelity brokerage account to offset, start maxing her Roth IRA for 3 years and use the brokerage account to offset, then finally with the remainder brokerage amount DCA into FXAIX and the Fidelity 2055 Fund (FDEWX) every 2 weeks over the next year.
We know there are going to be some long-term capital gains taxes on the mutual fund sale, but the gains are minimal and taxes will only be \~$3k.
She is below the IRA income threshold, has no debt, and has an emergency fund. I'm a career fed that's only experienced with TSP, so I'm looking for a sanity check here. TIA