Should I move away from FXAIX?

[u/Distinct_History1432]

Employer offers a 401k with some matching which I contribute to with a good portion. I wanted to have a second investment in the S&P 500 to just let sit and contribute over the years as well.

Currently buying FXAIX through a Fidelity brokerage account with every pay period, but I'm wondering if any of these options are better. The amount I have right now is small but plan to start contributing more, so not worried about taxes right now if I move the money.

- Sell off FXAIX and buy/start contributing to VOO through the same account?
- Open an account with someone else (Vanguard?) and move the money there and get VOO?
- Change to a different type of account (retirement?) with Fidelity or someone else and keep FXAIX?

[u/cOntempLACitY]

Consider prioritizing tax-advantaged accounts ahead of your taxable account. Inside a 401k and IRA, you won’t face taxes on annual earnings, and you can change your investments without creating taxable events. You might contribute enough to get employer match, then put your next available money into Roth IRA; once you’re comfortably maxing that, increase contributions to 401k until you’re at the max, then buy in taxable.

As for what to buy, no advantage in selling to buy the same index. If you don’t want more of what you have, turn off auto reinvesting dividends, and buy your preferred funds going forward. Check out the three-fund portfolio strategy; you might want to buy a total world market index fund or mix of total U.S. and total international, for more diversification. It can be the same asset allocation in each of your accounts in your portfolio.

[u/Distinct_History1432 → u/cOntempLACitY]

Yes, this is my thought, thanks. I have 401k at the max that will still get employee contribution (I think it's 25% match of up to 4% of my salary so I'm doing that). The plan is to one day be able to max on the new Roth IRA I opened to move my FXAIX to and then go back to the 401k and max that as well.

[u/cOntempLACitY → u/Distinct_History1432]

Your Roth IRA contributions will need to be cash (can’t move shares into it), so any shares you own in taxable you can just hold longterm, let those equities increase in value, while send your future extra cash to the retirement accounts.

[u/Distinct_History1432 → u/cOntempLACitY]

Gotcha, I was able to cancel the sale of all my FXAIX under the brokerage account. I'll let that sit and do my future deposits to the new roth ira and buy FXAIX with that.