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turnover rate and roth ira
Posted on 7/11/14 at 6:35 pm
Posted on 7/11/14 at 6:35 pm
Again im as green as green is. I am interested in a fidelity fund to start my roth. Im assuming that turnover rate doesn't really matter when the fund is in a tax free shelter.
Is this correct??
Is this correct??
Posted on 7/11/14 at 8:26 pm to ragacamps
Not an expert but I believe turnover rate is only one consideration that is part of total return. A mutual fund, just like you or me, will encounter higher expenses if we trade a lot. Also, a lower turnover rate may indicate a less active management style. For example, an index fund. If a mutual fund has a high turnover rate and a high expense but beats the crap out of a low turnover, low expense fund in total return then it still wins in the overall return game.
Posted on 7/11/14 at 9:00 pm to PlanoPrivateer
I should have asked it like this.
Roth ira
Pros and cons of contributing to a fund with a high turnover rate
Roth ira
Pros and cons of contributing to a fund with a high turnover rate
Posted on 7/12/14 at 6:43 am to ragacamps
Correct. A higher turnover rate leads to higher capital gains taxes. In a Roth, these are irrelevant. Same reasoning applies for a fund that spits out a lot of distributions.
ETA: but this is only part of what contributes to the expense ratio
ETA: but this is only part of what contributes to the expense ratio
This post was edited on 7/12/14 at 6:45 am
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