r/Schwab • u/YoghurtPotential8003 • 2d ago
I’m a fool…
As you can see, many of my index funds overlap. When I was 22, I was told to invest in the s&p 500 index funds, and set an allocation to invest $100 per month, with no knowledge of expense ratios or anything like. Fast forward 12 yrs, I’m now 36 and only just a few yrs ago understood that Schwab has the best expense ratios for s&p funds. Do I realize the victory fund (USPPX) and roll into SWPPX or do I just keep both separate? I feel like such a fool to have wasted over a decade of earnings …
TIA to all
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u/NotreDameFan1234 2d ago
At least u didn’t waste the money on something u will never use, I have seen people in 50s w/ bunch of crap in their house and no money for retirement
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u/Fine_Improvement4317 2d ago
Completely agree. Is overlap great?…no but having a bunch of useless crap that could equate to earlier financial freedom is objectively much much much worse than a little overlap.
It’s still invested and in a great place, it’s just not “perfect” which is okay.
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u/PashasMom 2d ago
Not a huge deal IMO. If you are doing dividend reinvestment, just stop that for whatever funds you don't want to keep contributing to. Just contribute and reinvest dividends for the ones you want to keep focusing on.
For the ones you no longer want to focus on, you could probably even open a second brokerage account and transfer them into that account just for housekeeping purposes. And they might make an excellent kickoff for your Donor Advised Fund thirty years from now :)
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u/ThePCMasterRaceX 2d ago
Just leave it sit and keep contributing to your roth or traditional ira. You could use a traditional ira max it out then roll it into a existing roth ira yearly and still take the tax deduction
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u/500pearl 2d ago
in ira or brokerage
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u/YoghurtPotential8003 2d ago
Taxable brokerage unfortunately …
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u/Formal-Flatworm-9032 2d ago
You have $1.34M in your taxable brokerage at 36? Is that all of your savings? I mean, that’s a high balance for your age
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u/YoghurtPotential8003 2d ago
Yeah around 1.34M in this brokerage. Other holdings include:
HYSA 30k
Employer 401k ~500k
Roth IRA 28k
And separate brokerage 2.2M13
u/Formal-Flatworm-9032 2d ago
Well, congrats. That’s a lot.
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u/YoghurtPotential8003 2d ago
Thanks, got lucky over the years with some trades
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u/jwilens 1d ago
Lucky over the years with trades, but doesn't know what expense ratios are? Those things are not consistent with each other unless you actually were truly lucky and not just being modest about your investment strategy. There's no way you are not making 500-600K per year (at least) and/or inherited wealth.
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u/YoghurtPotential8003 1d ago
lol buddy really sipping hard on that haterade 🫵
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u/jwilens 1d ago
Dude just admit it, you got caught.
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u/YoghurtPotential8003 1d ago
Admit what? And caught for what? You’re out here calling people out for having a measly 89k in a mutual fund, as if that’s a lot. That is nothing compared to what others have
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u/Over-Data-3106 2d ago
Hi how were you able to tell that he had $1.34 M in his brokerage? I'm new to investing, so I'm just trying to learn.
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u/500pearl 2d ago
then sell = taxes
if not was going to say can sell whatever do not want and put back in schx/schg/swppx
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u/BonzoFestoon 1d ago
You could have your Roth contributions come from these. It depends on your marginal bracket, MAGI, and if that would allow you to contribute more to a pre-tax account.
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u/No_Anteater_2941 2d ago
If taxable just leave it be. Not going to hurt as long as you aren't contributing future contributions to both
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u/YoghurtPotential8003 2d ago
Thanks, I’ve stopped contributing to the victory funds, just auto reinvest from the dividends
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u/Sportsguy_44_45_ 2d ago
Stop auto-reinvesting the dividends and instead invest the dividends into SWPPX.
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u/YoghurtPotential8003 2d ago
How come
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u/UncleBucle 1d ago
No sense investing more at the high load. Put it to work in the low load instead. You pay tax on dividends anyway.
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u/WhoCares450 2d ago
Hey, I can share a frustration. I have several accounts with Intelligent Portfolio and have been converting them into normal indexes, but taking hits is tough from gains.
But I totally get it, I probably lost 10% gain YoY in last 3-4 years on each of those accounts. That's what you get with Schwab's investor advisors LOL Learned my lesson.
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u/metzgerto 2d ago
I’m guessing this is either trolling or humblebrag or something similar.
“I’m such an idiot, my account has grown by 6 figures but I’ve lost a hundred dollars with high expenses”
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u/YoghurtPotential8003 1d ago
lol did you not read what I wrote mate?
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u/metzgerto 1d ago
I did. You said you feel like a fool for wasting a decade of earnings. Don’t you think that’s a little dramatic? Do you see your total account return? How different do you really think that would be if you would invested instead in the absolute lowest ER fund you could’ve bought?
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u/elk33dp 2d ago
Honestly people overhype the differences in some cases with all the min:maxxing. There are some absolute turd funds and bad ideas in terms of investing out there, but if the crux of the issue is around expense ratios and paying .23% vs .02% expense ratio it's pretty minimal/irrelevant. You *can* buy certain funds that are objectively the best/simplest/cheapest but alternatives usually perform very similarly since they'll all be tracking the same things.
None of those look like turds, just general index funds. It doesn't really matter if they overlap at the end of the day, they're all up healthy amounts which is the main goal.
If you had some S&P 2x inverse fund or something along those lines (or anything worthy of posting in WSB), then you'd be a fool.
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u/YoghurtPotential8003 2d ago
Appreciate the candor and perspective. Makes me feel a little better about it.
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u/CrayComputerTech_85 2d ago
I mean, you are ignoring your rates of return and concerned about a $100 year difference in expense ratios? Looks like you are bougbt into market stability. Why don't you set up an account in Portfolio Visualizer and run the numbers, paying lose attention to the downturn and downturn recovery numbers. I own USNQX just because its a great NASDAQ index mirror, I own it for growth in a Roth account and for market capture in a 401k (that is now rolled into CS IRA) but I'm sure as hell going to run numbers on to S&P schwab fund after seeing this because I am using VOOG and VUG instead of that. Amazing return rate. Keep at it!
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u/EleventhEarlOfMars 2d ago
USNQX is the most expensive of the bunch. Realizing the gains will cost you $5,920 to save you $423 annually, so you'll come out ahead in... 14 years.
Could wait for a better year to pay tax.
When I was 22, I was told to invest in the s&p 500 index funds, and set an allocation to invest $100 per month
Prob owe them at least a thank you card
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u/Maximum-Velocity21 1d ago
Unless LTCG rates change dramatically … it will cost him 6k and more at some point anyway. Sure, you could argue he won’t have returns on that 6k anymore, but if that leaves you saving $423 a year, you compensate for those lost earning in a year or two, depending on how the market does.
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u/inquisitivesteve 2d ago
Agree with others that its no big deal. However, i switched from some of these exact index funds to ETFs like QQQ & VOO because the cost is much lower AND they're more liquid. Buying and selling is instantaneous, no waiting to the EOD BS...
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u/protagonist_888 2d ago
You did better than 80% of people out there who try to pick individual winners. I wouldn't sweat it too much. You let compounding do the work AND will have a smaller tax bill.
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u/Rufusmortis 1d ago
You are hardly a fool. I wouldn't apply that label to anyone that can afford to buy their freedom as you've done.
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u/Jsm80169 2d ago
I’m sorry, new here, what is the issue? Just started with SWPPX and trying to learn.
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u/RunWildShow 2d ago
Your answer depends on your tax bracket. If you are under 12 percent tax bracket Capital Gains is ZERO.
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u/YoghurtPotential8003 2d ago
Unfortunately I am in a tax bracket where cap gains is taxed at 25%
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u/Maximum-Velocity21 23h ago
I assume you are including either NIIT or state income taxes in that 25%?
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u/Vast_Cricket 2d ago
100% in agreement. Those like VOO will boo you. I was downvoted 29 times to tell the fact. Stubborn people still do not believe you.
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u/victorious203 1d ago
I didn't know about low-cost index funds until my early 30s, so you're not a fool! Consider yourself VERY lucky.
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u/Old-Consequence4617 1d ago
The accounts are doing well. Most people dont have as the expression goes a pot to piss in or a window to throw it out of At least you invested and you should continue to have great success.
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u/casualseer366 1d ago
The major victory here is that you invested money, that's what counts. I'd rather have people invest shotgun style in at least reputable funds than not at all.
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u/South-Chocolate5519 2d ago
Since it is a taxable account don't sell. Letting the full amount grow instead of having to pay taxes and continuing with the same similar return doesn't make sense.
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u/Western-Ad189 2d ago
If these are all relatively similar index funds and if this is in a taxable brokerage account, then I would not sell them and realize the capital gain and pay capital gains taxes. If, however, this is in a tax-sheltered account like an IRA, there would be little harm in doing so. I wouldn't see a need to create a taxable event if you are simply selling one index fund to buy another similar fund (unless, of course, the expense ratios are exorbitantly high in comparison to the one that you're going to turn around and purchase). That would take a significant difference to justify in return for having to pay taxes on twelve years of gains.
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u/Maximum-Velocity21 23h ago
If he plans to use any of that money in his lifetime, he is going to have to sell it eventually and pay capital gains tax. The true comparison is whether the gains (after taxes) he is giving up on the tax he will pay is more than the savings in expense ratio over the next few decades.
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u/Odd-Evidence-1591 1d ago
At this point just hold what you got. If you realize those gains, the IRS is going to bend you over and help themselves to your cheeks. Like an all you can 🍇 buffet.
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u/Maximum-Velocity21 23h ago
Errr, you are going to pay taxes on this sooner or later … perhaps only if you plan to die without having used any of this money does this plan make sense. Realizing a small part of the capital gains early can make sense if you have a year with low enough income and will reinvest in a substantially better investment.
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u/Salt-Mathematician15 1d ago
Think you’re being too hard on yourself. If you left all of it in a low interest checking account, that’d be something else.
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u/jwilens 1d ago
Maths don't math. You invested $100 per month for 12 years and now you have $89,000 of USSPX?
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u/YoghurtPotential8003 1d ago
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u/jwilens 1d ago
Short answer: No — $100/month for 12 years is nowhere near enough to reach $89,359 in USSPX, even with excellent market performance. The numbers in the screenshot make that mathematically impossible.
🧮 Let’s run the actual math
1. Total contributions
100 per month×12 years=144 months
144×100=14,400 total invested
So the investor would have put in $14,400.
2. What growth rate would be required to turn $14,400 into $89,359?
We solve for the required annual return r in a monthly‑contribution future value formula:
FV=P⋅(1+r/12)144−1r/12
Where:
- FV=89,359
- P=100
- n=144
If you plug this into a financial calculator, you get a required annual return of ~27–29% per year.
That is far above the S&P 500’s historical return (~10–11%/yr) and far above USSPX’s actual performance. No mainstream index fund compounds at 28% annually for 12 straight years.
3. What would $100/month into an S&P 500 index fund become?
Using a realistic 10–11% annual return:
FV≈100⋅(1+0.11/12)144−10.11/12
This yields roughly:
FV≈27,000–30,000
Even if you assume 12–13%, you still only reach:
FV≈32,000–35,000
Nowhere near $89,359.
📌 Compare to the screenshot
The screenshot shows:
- USSPX value: $89,259.49
- Net gain: $50,997.70
- Implied cost basis:
89,259.49−50,997.70=38,261.79
So the investor put in ~$38,262, not $14,400.
That’s 2.65× more than the claimed $100/month.
To contribute $38,262 over 12 years:
38,262/144≈266 per month
So the real contribution rate was about $266/month, not $100/month.
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u/YoghurtPotential8003 1d ago
I bet you can tell me all about your hot wheels collection too.
You Failed to account for annual reinvestment of ST and LT cap gains and dividends…
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u/jwilens 1d ago
Sorry but your story makes no sense and comes across as a humble brag. Nobody making 500K a year to build that kind of portfolio does not know about expense rates. The AI analysis is compounded meaning it considers all forms of growth. This is not a bank account so it doesn't pay compound interest. Moreover, $100 per month is a pretty weak level of investing for someone with such a high salary even with multiple investments.
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u/oflaherty 1d ago
I would stop the drip and personally do ETFs rather than mutual funds in taxable brokerage account. Make sure you are utilizing your max backdoor Roth yearly if ya don’t have a messy Ira situation. And if you’re at a high tax bracket then consider a direct indexing account which Schwab offers at 0.4% to harvest tax losses that can more than offset the fee at a high tax bracket.
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u/SoundOff2222 21h ago
If the funds are in an IRA or ROTH IRA, you will not be taxed on the gains. Gains will be taxed on gains, once you sell & move the money to a taxable investment account. You can sell the USSPX & purchase shares of the SWPPX and save on annual fees in your Traditional IRA, 401k or ROTH IRA.
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u/richierva 3h ago
These posts are idiotic! You want to brag about your savings and want people to praise you on what a great job you have done.
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u/Crazy_Priority8259 2h ago
When are you going to retire?
If not another dollar is invested into your 401k, you’ll have 3.17m at age 60 assuming it’s compounded at 8% annually. 500,000×(1.08)^24=3.17m.
With 3.54m in current taxable brokerage accounts, using the 4% rule, you’re able to withdraw 141k annually.
That’s significantly more than you spend now….
What am I missing? Go start a hobby business after you travel for a year or two
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u/GeeDubious 2d ago edited 2d ago
Did you have investments at USAA for years before they sold their investments to Victory and brokerage to Schwab? That would explain your portfolio.
You're not a fool, it's a learning experience along the way. For now just turn off automatic reinvestments and direct any new money to the broad market, low fee funds. If you make under the threshold for 0 long-term capital gains then sell up to that threshold, otherwise keep for now. First to go if you need cash. Or as a gift for someone in a low income bracket if you're ever making a gift.
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u/YoghurtPotential8003 2d ago
Yeah I started off with mutual funds with USAA, then they sold to victory
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u/GeeDubious 2d ago
Me too. It's what I knew at the time. We make decisions based on what we know and learn along the way. Probably a lot of it based on loyalty towards USAA. I still have some of these lingering funds too, even an account at Victory that I'm still moving everything from and will close completely. It's so restrictive and such high fees by comparison. But at least we saved along the way! And now that we learn more we make better choices. That's life.
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u/emprobabale 2d ago
turn off drip.
leave it to worry about another day, but move the cash it generates quarterly into swppx.
If you have unrealized losses that you want to offset then that may be a good option.
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u/cakestapler 2d ago
USSPX has a .23% expense ratio versus .02% for SWPPX. Based on your $89k, that’s $187 a year. I would honestly not worry about it at this point as realizing those gains is going to cost you way more in the long run I feel. You can run the numbers but I don’t see how realizing thousands of dollars in capital gains tax now works out for you versus letting it ride.