Selling and re-investing an index fund bought through an adviser

[NorthernQuokka]

Hi all,

I'm still very new to investing and this forum. Thank you firstly for all the advice you've provided to me thus far. So much to read and so much to catch up on.

I have an index fund that I have purchased through a financial adviser that has high fees compared to if I bought any fund directly myself.

As far as I can tell the simple answer is to cash out on this fund and re-invest it. I know one cannot accurately time the market but I feel now would not be a good time to move the funds.

Is there any other disadvantage for me cashing out the fund at a later date? Or should I just hold the account for longer? If it's so straightforward, I feel pretty stupid for not doing this earlier. I don't need the money right now and the fees are probably 0.5% higher + a few lesser fees to manage it via them so I don't know if I am missing something. I just feel very anxious taking out a large sum of money that seems to be performing ok! I know this is an emotional reaction but I lack the knowledge and experience to make the best decision at the moment.

 

[Bill M]

My opinion is that if you can get out of the fund you are in on the same day and re-enter another ETF or fund on the same day then you only have brokerage fees to contend with as you are buying and selling in the same market. On the other hand, if it takes 2, 5, 7 or more days to get out of your fund then you leave yourself open to market risk. By that I mean lets say today is day 1 and on day 7 you get your money, the market may have gone up considerably since day 1 and you would have lost a lot of potential gains.

This is me only, but if I am not happy with a fund then I prefer to get out at a reasonable price and if the market moves against me then so be it. I hate being held hostage to something I am not happy with. Good luck anyway.

 

[NorthernQuokka]

My opinion is that if you can get out of the fund you are in on the same day and re-enter another ETF or fund on the same day then you only have brokerage fees to contend with as you are buying and selling in the same market. On the other hand, if it takes 2, 5, 7 or more days to get out of your fund then you leave yourself open to market risk. By that I mean lets say today is day 1 and on day 7 you get your money, the market may have gone up considerably since day 1 and you would have lost a lot of potential gains.

This is me only, but if I am not happy with a fund then I prefer to get out at a reasonable price and if the market moves against me then so be it. I hate being held hostage to something I am not happy with. Good luck anyway.

Oh that's a very very good way to look at it. I feel I am hostage at the moment so will make the switch sometime soon. I was worried I was missing something but I think you've explained it in terms of fees and I suspect maybe even tax I will have to pay? Is that right?

Thank you. I think it will take 7 days at least for the fund to clear with the adviser I am currently with because it is not a ETF.

I should start to make my way to the exit door.

Curious- while we are on the topic - I am with CommSec at the moment and signed up for Vanguard directly. I am thinking of signing up for self-wealth. Any opinions on who you use?

 

[Bill M]

Hi, yes, if you sell the current fund you will most likely have to pay capital gains tax so it is best to talk to your accountant before doing anything. Their could be some serious tax implications there for you so be careful before acting.

I myself use Commsec and Westpac Online Broking but apart from generic write ups on the actual share or ETF you are thinking about buying I just use them for buying and selling only. I don't take advice or recommendations from brokers and I don't buy into their "structured funds" either. I do all my own research through the ETF suppliers website, google and any other way I can find info on any ETF including from members here who might hold a specific ETF or stock.

I never heard of self-wealth so took a quick look at them just now. Seems like a another online broker, nice website but don't know much about them, cheers.

 

[NorthernQuokka]

Hi, yes, if you sell the current fund you will most likely have to pay capital gains tax so it is best to talk to your accountant before doing anything. Their could be some serious tax implications there for you so be careful before acting.

I myself use Commsec and Westpac Online Broking but apart from generic write ups on the actual share or ETF you are thinking about buying I just use them for buying and selling only. I don't take advice or recommendations from brokers and I don't buy into their "structured funds" either. I do all my own research through the ETF suppliers website, google and any other way I can find info on any ETF including from members here who might hold a specific ETF or stock..

Thank you for the advice.
This is what I am a bit worried about. The capital gains tax. I feel that if I purchase a fund now it's a very important decision as the money will be 'locked in' for some time in a sense that I will have to leave it in for quite some time to accrue money prior to making enough to offset the tax...

Again, very helpful and thanks for taking the time!