Good ETFs are more tax-efficient than some mutual funds--which is why switching to ETFs is good general advice. This would be true going forward (it would not pertain to the mutual funds you already own).The only reason why I am debating to switch to ETF is the fact he has $2900 in gains and I want to avoid paying capital gains on it. However, not sure if waiting for the "down" market and sell it then because my concern is if I will actually remember to do this when the "down" market happens.
The Fidelity funds you're choosing between are all good tax-efficient mutual funds. There's no real strong/credible reason to worry about keeping them for the long term vs switching to comparable ETFs.
I would focus on deciding whether you or your child has more experience with stock trading (in which case etfs may be more familiar) or savings/retirement accounts (in which case mutual funds may be more familiar). Choose one and then stop worrying about it.
The reason to not hold FNILX in a taxable account is that the Zero Funds can only be held at Fidelity, so if for some reason in 20 years your child needs to switch to some other company they'll have to sell the mutual fund. All the other mutual funds you're considering (and the etfs) are portable between brokerages. Owning the Zero Funds in a taxable account locks you into keeping them at Fidelity and there's no reason to limit your future self, a lot could happen over the 30-80 years of your child's investing life.
PS: If you're interested, as a hobby, in learning more about ETFs I think it can be worthwhile to learn how they work and how to invest in them--I find them superior. But it's unlikely to be an important factor in how your financial life plays out (choosing mutual funds vs ETFs...learning is probably an important factor).
Statistics: Posted by dorster — Tue Feb 13, 2024 1:30 pm — Replies 46 — Views 4563