On today's episode of Ready for Retirement, we're going to be discussing what you should do when you have investments with significant unrealized gains.

Specifically, we're going to be talking about the tax strategy.

Do you sell those gains, pay the tax bill, and diversify into what you want to be owning?

Or instead, should you continue to hold the funds, forego the tax liability, at least for the time being,

and then do something different. That's what we're discussing on today's episode of Ready for

retirement. This is another episode of Ready for Retirement. I'm your host, James Cannell,

and I'm here to teach you how to get the most of the life with your money. And now, on to the

episode. To help us in this discussion, we actually

have a listener question, and this question comes from Benjamin. Benjamin says the following.

I'm 58 years old. I'm planning on retiring around age 65. I have a taxable account with

four expensive mutual funds that I want to convert to low-cost index funds. The problem is I've had these

funds for over 25 years and they have significant appreciation. I stopped contributing to them and I

stopped reinvesting dividends and capital gains a long time ago. These funds at best do the same as

their associated indexes and the total value of these funds is around $1 million, with the average

gain around 75%. The average internal expense is around $1 million, with the average gain around 75%.

The average internal expense is around 1.3% per year, and it's killing me to pay over $10,000

in fees each year for these funds, but I don't know if it's worth a tax hit to sell them

and convert them to index funds. My capital gains tax rate is 20%. My question is where is the break-even point in this situation, Benjamin?

Well, Benjamin, thank you for that question.

And I think this is a classic case of planning.

Look, there's no perfect answer in most cases.

There's not something that's all good and no bad.

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