Benjamin, nearing retirement at 65, faces a familiar dilemma with his taxable account housing expensive mutual funds. Despite their underperformance, converting to low-cost index funds entails a significant tax hit due to long-held appreciable value. James explains weighing the immediate tax consequences against the risk of holding onto underperforming assets. He also provides a framework for assessing risk, identifying options, and making decisions based on personal financial goals.Questions Answered: How can you decide whether to sell underperforming mutual funds or continue holding onto them? What factors should you consider in determining whether converting to low-cost index funds aligns with your financial goals and risk tolerance?Timestamps:0:00 - Listener question from Benjamin2:17 - Tail wagging dog?3:52 - Benjamin’s situation5:31 - WCS of selling vs not selling11:17 - Be careful about tax drag12:47 - Rethinking the break-even point14:11 - Consider your goal for the money17:17 - Identify the bigger risk19:26 - Make your decision20:26 - Will your tax situation change?24:20 - Consider staggering sales28:21 - Summary
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